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Sciences 
Corporation 


23  WEST  MAIN  STB^RT 

WEBSTEN.N.Y.  14580 

(716)  872-4503 


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CIHM/ICMH 

Microfiche 

Series. 


CIHM/ICMH 
Collection  de 
microfiches. 


Canadian  Institute  for  Historical  Microreproductions  /  Institut  Canadian  de  microreproductions  historiques 


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Technical  and  3ibliographic  Notes/Notes  techniques  et  bibilographiques 


The  institute  has  attempted  to  obtain  the  best 
original  copy  available  icr  filming.  Features  of  this 
copy  which  may  be  bibilographically  unique, 
which  may  alter  any  of  the  images  in  the 
reproduction,  or  which  may  significantly  change 
the  usuol  method  of  filming,  are  checked  below, 


D 


D 
D 

n 


:Z 


D 


Coloured  covers/ 
Couverture  de  couleur 


□   Covers  damaged/ 
Couverture  endommagee 


□ 


Covers  restored  and/or  laminated/ 
uverture  restaurAe  et/ou  pellicul6e 


I      I   Cover  iitie  missing/ 


Le  titre  de  couverture  manque 


I      I   Coloured  maps/ 


Cartes  gAographiques  en  couleur 


Coloured  ink  (i.e.  other  than  blue  or  black)/ 
Encre  de  couleur  (i.e.  autre  que  bleue  ou  noire) 


Coloured  plates  and/or  illustrations/ 
Planches  eZ/ou  illustrations  n(\  couleur 


Bounti  with  other  material/ 
Reli6  avec  d'autres  documents 

Tight  binding  may  cause  shadows  or  distortion 
along  interior  margin/ 

La  reliure  serr6e  peut  causer  de  I'ombre  ou  de  la 
distortion  is  long  de  la  marge  intArieure 

Blank  leaves  added  during  restoration  may 
appear  within  the  text.  Whenever  possible,  these 
have  been  omittvd  from  filming/ 
11  se  peut  que  certaines  pages  blanches  ajout#es 
lors  d'une  restauration  apparaissent  dans  le  texte, 
mais,  Inrsque  cela  Atait  possible,  ces  pages  n'oni 
pas  4t )  fiimAes. 

Additional  comments:/ 
Commentaires  suppi4mentaires; 


L'Institut  a  microfilm^  le  meilleur  exemplaire 
qu'il  (ui  a  At6  possible  de  se  procurer.  Les  ditaiis 
de  cet  exemplaire  qui  sont  peut-Atre  uniques  du 
point  de  vue  bibltographique,  qui  peuvent  modifier 
une  image  reifiroduite,  ou  qui  peuvent  exiger  une 
modification  dans  la  methods  normale  de  filmage 
sont  indiquAs  ci-dessous. 


pn   Coloured  paqes/ 


v^ 


D 


Pages  de  couieur 

Pages  damaged/ 
Pages  endommagies 


□   Pages  restored  and/or  laminated/ 
Pages  restaur6es  et/ou  pellicul6es 


Pages  discoloured,  stained  or  foxed/ 
Pages  ddcoiordes,  techeties  ou  piqu6es 


I      I    Pages  detached/ 


Pages  d6tach6e8 

Showthrough/ 
Transparence 

Quality  of  prir 

Quality  in6gale  de  I'impresslon 

Includes  supplemental^  materii 
Comprend  du  material  supplAmentaire 

Only  edition  available/ 
Soule  Mition  disponible 


I      I  Showthrough/ 

I      I  Quality  of  print  varies/ 

I      I  Includes  supplemental^  materiaC/ 

I — I  Only  edition  available/ 


Peges  wholly  or  partially  obscured  by  errata 
slips,  tissues  etc.,  have  been  refilmed  to 
ensure  the  best  possible  image/ 
Les  pages  totalement  ou  partieliement 
obscurcies  per  un  feuillet  d'errata,  une  pelure, 
etc.,  ont  6t6  filmAes  A  nouveau  da  fapcn  A 
obtenir  la  meilleure  image  possible. 


This  item  is  filmed  at  the  reduction  ratio  checked  below/ 

Ce  document  est  film*  au  taux  de  reduction  indiqu*  ci-dest»ous. 


10X 

14X 

18.^ 

22X 

28X 

aox 

— T" 
1 

7 

12X 


16X 


20X 


24X 


28X 


32X 


The  copy  filmed  here  has  been  reproduced  thanks 
to  the  generosity  of: 

Library  of  the  Public 
Archives  of  Canada 


L'exempiaire  film6  fut  reproduit  grflce  k  la 
gAn6rosit6  de: 

La  bibliothdque  des  Archives 
publiques  du  Canada 


The  images  appearing  here  are  the  best  quality 
possible  considering  the  condition  and  legibility 
of  the  original  copy  and  in  keeping  with  the 
filming  contract  specifications. 


Original  copies  in  printed  paper  covers  are  filmed 
beginning  with  the  front  cover  and  ending  on 
the  last  page  with  a  printed  or  illustrated  impres- 
sion, or  tht*  back  cover  when  appropriate.  All 
oth3r  original  copies  are  filmed  beginning  on  the 
first  page  with  a  printed  or  illustrated  impres- 
sion, and  ending  on  the  last  page  with  a  printed 
or  illustrated  impression. 


Les  images  suivantes  ont  6t6  reproduites  avec  le 
plus  grand  soin,  compte  tenu  de  la  condition  at 
de  la  nettet6  de  Texemplaire  filmd,  et  en 
conformit6  avec  les  conditioni*  du  contrat  de 
filmage. 

Les  exemplaires  originaux  dont  la  couverture  en 
papier  est  imprimde  sont  filmds  en  commenpant 
par  le  premier  plat  et  en  terminant  soit  par  la 
dernidre  page  qui  comporte  une  empreinte 
d'impressicn  ou  d'illustration,  soit  par  le  second 
plat,  pelon  le  cas.  Tous  les  autres  exemplaires 
originaux  sont  film6s  en  commenpant  par  la 
premidre  page  qui  cumporte  une  empreinte 
d'impression  ou  d'illustration  et  en  terminant  par 
la  derniftre  page  qui  comporte  une  telle 
empreinte. 


The  last  recorded  frame  on  each  miciofiche 
shall  contain  the  symbol  — ^  (meaning  "CON- 
TINUED"), or  the  symbol  V  (meaning  "END"), 
whichev&r  applies. 


Uii  des  symboles  suivants  apparaitra  sur  la 
derniire  image  de  cheque  microfiche,  seion  le 
cas:  le  symbols  — ►  signifie  "A  SUIVRE".  le 
symbols  V  signifie  "FIN". 


Maps,  plates,  charts,  etc.,  may  be  filmed  at 
different  reduction  ratios.  Those  too  large  to  be 
entirely  included  in  one  exposure  ere  filmed 
beginning  in  the  upper  left  hand  corner,  <eft  to 
right  and  top  to  bottom,  as  many  frames  as 
required.  The  following  diagrams  illustrate  the 
method: 


Les  cartes,  planches,  tableaux,  etc.,  peuvent  dtre 
film6s  d  des  taux  de  rdductiun  diff^rents. 
Lorsque  le  document  est  trop  grand  pour  dtre 
reproduit  en  un  ssul  cliche,  il  est  film6  A  partir 
de  i'angle  'jtup6rieur  gauche,  de  gauche  d  droite, 
et  de  haut  en  bas,  en  prenant  le  nombre 
d'images  n6cessaire.  Les  diagrammes  suivants 
illustrent  la  m6thode. 


1 

2 

3 

2 

3 

1 

4 

5 

6 

WHY   WE   TRADE 


AND 


HOW  WE  TRADE 


OR 


AN  INQUIRY  INTO  THE  EXTENT 

TO  WHICH    THE   EXISTING   COMMERCIAL    AND 

FISCAL  POLICY  OF  THE  UNITED  STATES  RESTRICTS  THE 

MATERIAL  PROSPERITY  AND  DEVELOPMENT 

OF    THE    COUNTRY 


BY 


DAVID   A.   WELLS 


G.    P. 


NEW  YORK 

PUTNAM'S    SONS 
182  Fifth  Avenue 

1878 


wm 


f, 


THE  SUBSTANCE  OF  THIS  ECONOMIC   INQUIRY  APPEARED  ORIGINALLY  IN 
THE    NORTH    AMERICAN    REVIEW    FOR    SEPTEMBER,    1877,  AS    ONE    OF    A 

SERIES  OF  ARTICLES  ENTITLED,  "  JIow  shall  the  Nation  regain  Prosper- 
ity?" IT  IS  NOW  REPRODUCED  WITH  SUCH  ALTERATIONS,  ADDITIONAL 
MATTER,  AND  REFUTATIONS  OF  CERTAIN  PROTECTIONIST  CRITICISMS 
WHICH  ITS  ORIGINAL  PUBLICATION  OCCASIONED,  AS  RENDER  IT  A  MON- 
OGRAPH  COMPLETE  IN  ITSELF,  ON  THE  INFLUENCE  OF  THE  EXISTING 
LAWS  WHICH  RESTRICT  THE  TRADE  AND  COMMERCE  OF  THE  UNITED 
STATES  WITH  FOREIGN  NATTONS,  AND  ON  THE  PROSPERITY  AND  INDUS- 
TRIAL  DEVELOPMENT  OF  THE  COUNTRY. 


HPPIP 


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WHY  WE  TRADE 


AND 


HOW    WE    TRADE. 


RELATION    OF    POPULATION    TO    PRODUCTION  IN  THE 

UNITED   STATES. 

The  returns  of  the  last  national  census  show,  that 
while  the  population  of  the  United  States  increased 
during  the  period  from  i860  to  1870  in  the  ratio  of  22.2 
per  cent.,  the  increase—measured  in  kind — in  the  prod- 
uct of  our  so-called  manufacturing  industries,  during 
the  same  period,  was  52  per  cent.,  or  a  ratio  that  was 
more  than  double  the  ratio  of  the  gain  in  population. 

Or,  to  put  the  case  differently:  in  1850  the  value  of 
the  annual  product  of  our  manufacturing  industries  was 
returned  as  averaging  $44  per  capita  of  our  entire  popu- 
lation. In  i860  it  was,  probably,  about  $65  per  capita. 
But  in  1870,  by  reason  of  our  great  natural  resources, 
and  the  extraordinary  application  of  brains  and  ma- 
chinery which  had  been  made  for  their  development  and 
utilization,  the  value  of  this  annual  average  had  in- 
CTQ^sQd  mmim//f  to  $128  per  capita.    We  say  nomi- 

5 


IV//V   WE   TRADE  AND  HOW   WE   TRADE. 


nally,  ^or  a  considerable  part  of  this  large  increase 
simply  represented  an  increase  of  prices  due  to  currency 
inflation  and  other  general  causes ;  but,  making  all  proper 
allowance  for  such  disturbing  elements,  the  value  of  our 
manufactured  product  for  1870  undoubtedly  averaged 
from  $90  to  %\oo per  capita. 

That  this  same  tendency  for  manufacturing  produc- 
tion to  increase  in  a  far  greater  ratio  than  population 
(or,  what  is  the  same  thing,  domestic  capacity  for  con- 
sumption) also  continued  after  1870  is  further  indicat- 
ed by  the  circumstance,  that  while  the  number  of  cot- 
ton-spindles in  the  United  States  increased  from  7,114,- 
000  in  1870,  to  9,415,383  in  1874,  or  in  the  ratio  of 
nearly  33  per  cent.,  the  increase  of  our  population  dur- 
ing the  same  period  could  not  well  be  estimated  as 
having  been  in  excess  of  1 1  per  cent. 

NATIONAL  NECESSITY  FOR  LARGER   MARKETS. 

It  is  evident,  therefore,  that  the  capacity  of  the  coun- 
try for  production  has  far  outrun  its  power  of  domestic 
consumption ;  and  also,  that  what  the  country  now 
most  needs,  and  what  it  must  have  if  it  would  have 
prosperity,  are  larger  markets — markets  outside  of  itself 
— for  the  sale  of  the  surplus  products  of  its  labor  and 
capital.  Such  markets  the  country  does  not  at  present 
possess. 

While  our  population  has  increased  from  31,183,000 
in  i860,  to  at  least  45,500,000  in  1876,  or,  for  the  sixteen 


I 


PV//V   ^VE   TRADE  AND  HOW   WE   TRADE.  7 

years  inclusive,  at  the  rate  of  about  46  per  cent. ;  and 
while  our  producinfj  capacity,  as  above  shown,  has  in- 
creased during  this  same  period  in  a  much  greater  ratio, 
our  entire  exports  of  manufactured  products — compar- 
ing 1876  with  i860 — have  not  only  relatively  decreased, 
but,  in  respect  to  a  very  large  class  of  staple  articles, 
were  actually  and  absolutely  less  in  1876  than  they  were 
in  1 860.*  And  as  a  necessary  and  inevitable  consequence 
of  this   inability  to  dispose    of   our  surplus  products, 

y ■        !.■■    M^    ■—    I  ■      '■       I  *  I       .»  -  — I    ■  _  ■■.  I  ..I  „     I  ■■      ...11..,  ■  I.  ■  I  I  ■ 

*  The  follow  ing  table  shows  the  exports  of  certain  leading  manufactured 
articles  from  the  United  States  in  i86o  and  in  1876 : 

i860.  1876. 

Oil,  sperm $1,789,089  $1,366,246 

Household  furniture 1,079,114  1,574,935 

Carriages,  cars,  and  parts  of. 816,973  1,147,963 

Candles 708,699  229,311 

Soap 494.405  684.739 

Tobacco,  manufactured 3,372,074  2,833,155 

Gunpowder 467,772  67,877 

Boots  and  shoes 782,525  368,633 

Cables  and  cordage 246,572  271,090 

Nails 188,754  381,236 

Iron  castings 282,848  269  3'2 

Manufactures  of  iron 5,174,040  7,598,743 

Cotton  piece  goods 10,934, 796  7, 722,978 

Drugs  and  medicines 1,115,455  2,471,195 

Wearing  apparel ....c 525,^75  579.595 

Glass 277,948  628,121 

Hats 211,602  247,553 

Paints  and  varnish 223,809  234,728 

Paper  and  stationery 285,798  795>I76 

Printing  presses  and  type 157,124  119,749 

Total.. $29,134,572  $29,592,345 

Reducing  the  currency  figures  for  1876  to  a  gold  basis,  in  order  to  com- 


"■PHiPPff 


TSf 


i^^^F 


8 


lF//y   WE   TRADE  AND  HOW   WE   TRADE, 


production  has  been  arrested ;  mills,  nnines,  and  furnaces 
stand  still,  or  are  but  partially  operated ;  labor  \rainly 
seeks  opportunity  for  employment  and  capital  for  re- 
munerative investment ;  values  shrink ;  confidence  is 
impaired ;  pauperism  increases  ;  and,  by  reason  of  in- 
creased necessities  and  temptations,  crimes  multiply. 

WANTS  AND   THEIR  SATISFACTIONS. 


This  limitation  of  market",  for  the  products  of  Ameri- 
can labor  and  capital  is  due  to  a  variety  of  agencies, 
operating  with  varied  degrees  of  influence.  These 
agencies  are  all  artificial,  and  so  capable  of  removal. 
There  is  not  one  that  is  natural ;  but  they  owe  their 
origin,  mainly  or  exclusively,  to  the  fiscal  policy  of  the 
Government  of  the  United  States,  under  which  the 
industry,  trade,  and  commerce  of  the  country  for  the  past 
sixteen  years  has  been  unnaturally  controlled  and  influ- 
enced. 

In  the  present  essay,  it  is  proposed  to  discuss  the 


pare  evenly  with  the  gold  valuations  of  i860,  the  aggregate  value  of  the 
exports  for  1876  should  be  stated  at  $26,750,000  ;  showing  a  decrease  in 
the  aggregate  value  of  the  exports  of  the  above  enumerated  articles  in 
1876.  as  compared  with  i860,  of  $2,830,000,  or  to  the  extent  of  8  percent. 
Again,  bringing  all  the  products  that  can  be  legitimately  classed  as 
manufactures  into  one  group,  the  ratio  which  the  value  of  our  man- 
ufactured exports  sustained  to  the  value  of  our  total  exports  from  1851 
to  i860,  the  ten  years  immediately  preceding  the  war,  was  13.8  per  cent.; 
while  from  1866  to  1876,  the  ten  years  immediately  succeeding  the  war, 
the  corresponding  ratio  was  only  10.3  per  cent. 


Pr/fY  WE   TRADE  AND  HO  IV   WE   TRADE. 


nature  and  operation  of  a  single  one  of  these  agencies, 
which  as  an  instrumentality  of  evil  fs  undoubtedly  en- 
titled to  rank  among  the  first  in  the  order  of  importance; 
and,  as  pertinent  to  this  proposition,  it  is  desirable  to 
attempt  to  obtain  in  the  outset  a  clear  idea  of  how 
wants,  in  general  (of  things  essential  to  a  good  liveli- 
hood), arise,  and  how,  in  general,  they  are  satisfied. 

Wants  have  their  origin  in  human  nature,  and  are 
practically  illimitable.  No  one  ever  has  all  he  wants, 
though  pretension  may  be  made  to  that  effect.  In  gen- 
eral, every  one  satisfies  his  wants  by  his  own  labor;  but 
no  man  who  is  not  a  savage  or  a  Robinson  Crusoe  ever 
attempts  to  obtain  all  he  wants  by  his  own  labor  direct- 
ly, or  from  the  products  of  one  locality;  and  nature 
evidently  u^/er  intended  that  it  should  be  otherwise. 
For  there  is  no  nation,  or  country,  or  communis;',  nor 
probably  any  one  man,  that  is  not,  by  reason  of  differ- 
ences in  soil,  climate,  physical  or  mental  capacities,  at 
advantage  or  disadvantage  as  respects  some  other  na- 
tion, country,  community,  or  men,  in  producing  or  do- 
ing something  useful.  It  is  only  a  brute,  furthermore, 
as  economists  have  long  recognized,  that  can  find  a  full 
satisfaction  for  its  desires  in  its  immediate  surround- 
ings ;  while  poor  indeed  must  be  the  man  of  civilization 
that  does  not  lay  every  quarter  of  the  globe  under  con- 
tribution every  morning  for  his  breakfast.  Hence — 
springing  ou'  of  this  diversity  in  the  powers  of  produc- 
tion, and  of  wants  in  respect  to  locations  and  individ- 


1^ 


10 


W//V   WE   TRADE  AND  HOW   WE   TRADE, 


uals — the  origin  of  trade.  Hence  its  necessity  and  ad- 
vantage ;  and  the  man  who  has  not  sufficient  education 
to  read  the  letters  of  any  printed  book  perceives  by 
instinct,  more  clearly,  as  a  general  rule,  than  the  man  of 
civilization,  that  if  he  can  trade  freely,  he  can  better  his 
condition  and  increase  the  sum  of  his  happiness ;  for 
the  first  thing  the  savage,  when  brought  in  contact  with 
civilized  man,  wants  to  do,  is  to  exchange ;  and  the 
nrst  effort  of  every  new  settlement  in  any  new  country, 
after  providing  temporary  food  and  shelter,  is  to  open  a 
road  or  other  means  of  communication  to  some  other 
settlement,  in  order  that  they  may  trade  or  exchange 
the  commodities  which  they  can  produce  to  advantage, 
for  th6  products  which  some  others  can  produce  to 
greater  advantage.*  And,  obeying  this  same  natural 
instinct,  the  heart  of  every  nan,  that  has  not  been  filled 
with  prejudice  of  race  or  country,  or  perverted  by  talk 


*  There  has  been  much  of  speculation,  in  which  Henr>'  C.  Carey  has 
taken  the  lead,  as  to  what  determines  the  location  of  settlements  in  new 
countries,  and  whether  a  community,  if  left  to  itself,  will  occupy  primar- 
ily the  poor  or  the  rich  soiL.  But  the  theory  or  consideration,  above  all 
others,  that  is  determinative  of  this  question,  is  the  natural  methods  or 
channels  available  in  the  first  instance  for  intercommunication  v/ith  other 
settlements  or  centers  of  population.  And  hence  such  new  settlements 
always  follow  in  th<^  first  instance  the  sea-coast  or  the  shores  of  navigable 
la'ces  or  rivers,  and  rarely  penetrate  otherwise  into  the  interior.  Thi; 
cheap,  easily  cultivated,  fertile  lands  of  the  States  north  of  the  Ohio  and 
east  of  the  Mississippi,  would,  without  the  ready  means  of  intercommuni- 
cation affordec  in  the  fiist  instance  by  the  Erie  Canal  and  then  by  the 
I'ailroads,  have  remained  to  the  present  hour  almost  as  much  a  wilderness 
^s  they  were  at  the  commencement  of  ihe  present  century. 


W//y   WE    TRADE  AND  HOW  WE   TRADE.  n 


[iibout  the  necessity  of  tariffs  and  custom-houses,  experi- 
ences a  pleasurable  emotion  when  it  learns  that  a  new 
road  has  been  opened,  a  new  railroad  constructed,  or 
that  the  time  of  crossing  the  seas  has  been  greatly 
shortened;  and  if  to-day  it  could  be  announced  that  the 
problem  of  aerial  navigation  had  been  solved,  and  that 
hereafter  everybody  could  go  everywhere,  with  all  their 
goods  and  chattels,  for  one-tenth  of  the  cost  and  in  one- 
tenth  of  the  time  that  is  now  required,  one  universal 
shout  of  jubilation  would  arise  spontaneously  from  the 
whole  civilized  world.  And  why?  Simply  because 
everybody  would  feci  that  there  would  be  forthwith  a 
multitude  of  new  wants,  an  equal  multitude  of  new  sat- 
isfactions, an  increase  of  business  in  putting  wants  and 
satisfactions  into  the  relations  of  equations  in  which 
one  side  would  balance  the  other,  and  an  increase  of 
comfort  and  happiness  everywhere.  *•  The  advantage 
derived  from  the  division  of  labor  is  well  known.  But 
what  is  effected  by  the  operation  of  this  principle  for  a 
s'ngle  undertaking  is,  by  the  aid  of  commerce,  effected 
foi  the  whole  world.  Commerce  enables  the  population 
of  each  separate  district  to  make  the  most  of  its  pecu- 
liar advantages,  whether  derived  ^rom  nature  or  ac- 
quired by  the  application  of  industry,  uJent,  or  capital; 
to  make  the  raost  of  them  for  its  own  consumption ; 
leaving,  at  the  same  time,  the  greatest  possible  remainder 
to  be  given  in  exchange  for  any  other  commodities  pro- 
duced m.ore  easily,  more  abundantly,  or  of  better  quality 


m 


12 


IVI/y   WE   TIRADE  AND  HOW   WE    TRADE. 


in  Other  districts  of  the  world.    It  is  thus  that  a  country 
is  enriched  by  commerce. — Huskinson,  1819. 

At  the  same  time  this  truth,  which  is  in  the  nature  of 
an  economic  axiom,  ought  to  be  clearly  kept  in  mind, 
namely,  that  there  is  no  wealth  to  be  made  through 
trade  or  exchange  of  products,  beyond  the  simple  econ- 
omy that  results  from  the  producer  supplying  the  con- 
sumer cheaper  than  the  consumer  can  supply  himself 
directly  by  his  own  efforts.  So  much,  then,  for  why  we 
trade.    A  brief  word,  next,  for 


HOW  WE  TRADE. 

Many,  perhaps  most,  people  who  have  not  thought 
nriuch  on  the  subject — certainly  many  legislators,  to 
judge  from  their  talk— regard  money  as  essential  for 
trade.  They  are  in  the  habit  of  thinkin.s:  that  when  we 
buy  anything,  it  is  necessary  to  give  money,  and  when 
we  sell,  to  receive  money.  Money  is  not,  however,  ab- 
solutely essential  to  trade,  business,  or  production.  It 
facilitates  trade ;  it  is  a  most  useful  and  desirable  ad- 
junct of  trade,  and  discharges  the  same  function  in  trade 
as  a  ship,  a  locomotive,  a  horse  and  cart,  or  a  wheel- 
barrow, though  in  a  larger  and  higher  degree  than  any 
of  these,  or  all  other  similar  instrumentalities.  Trade, 
ag  in,  existed  before  money,  and  would  continue 
t1  ugh  all  money  were  swept  out  of  existence.  The 
whole  tendency  c;  modern  civilization  is  to  diminish 
the  amount  of  money  used  for  effecting  exchanges. 


WHY    WE    TRADE    AND  HOW   WE    TRADE. 


13 


The  whole  cleanng-house  system  is  merely  setting  off 
the  results  of  the  sale  of  one  class  of  commodities 
against  the  sale  of  another  class,  without  employing 
money  as  an  intermediate  instrumentality.  No  nation 
or  community  ever  has  sufficient  money  to  pay  for  its 
outside  or  foreign  "purchases,  or,  if  it  knew  its  own  in- 
terest, would  use  it  if  it  had.  The  amount  of  money 
employed  in  international  exchanges,  furthermore,  is 
the  merest  fraction  of  the  value  of  such  exchanges. 

These  statements  are  all  truisms ;  the  A  B  C's  of 
economic  knowledge;  yet  they  are  not  understood  by 
the  mass  of  the  people,  or  by  those  whom  the  people 
select  to  represent  them  in  legislative  assemblies ;  and 
because  they  are  not  understood  is  one  great  reason 
why  this  nation  is  now  in  trouble.  It  is  important, 
therefore,  to  endeavor  to  make  more  clear  these  truisms 
by  illustration  ;  su  :h,  for  example,  as  is  afforded  by  the 
analysis  of  what  takes  place  in  the  purchase  and  sale  of 
a  pair  of  shoes. 

Ask  most  people  what  is  involved  in  such  a  familiar 
transaction,  and  they  will  tell  you,  *' Why,  of  course  we 
understand.  What  a  frivolous  question  !  We  went  to 
the  shop ;  picked  out  and  took  what  suited  us  ;  gave 
the  shoemaker  five  dollars,  more  or  less,  and  departed. 
That's  all  there  was  about  it."  But  hold  !  there  was  a 
good  deal  more  than  that  involved  in  the  transaction ; 
so  much  more,  that  he  who  fully  understands  it  has 
mastered  the  fundamental  principles  of  finance,  coni- 


fr 

it 

if' 


14 


PVI/y   WE    TRADE  AND  HOIV  WE   TRADE, 


merce,  and  political  economy,  though  he  may  never  in 
his  life  have  read  a  book  or  attended  a  lecture  on  the 
subject.  What  the  shoemaker  gave  was  the  result  of 
his  labor  applied  to  a  piece  of  leather  ;  as  the  leather 
was  the  result  of  some  other  man's  labor  applied  to  a 
piece  of  hide ;  as  the  hide  was  the  result  of  a  third  man's 
labor  given  to  the  raising  of  catt'e.  On  the  other  hand, 
what  was  given  for  the  shoes  in  the  first  instance  was  a 
sum  of  money ;  but,  unless  the  money  was  a  gift  to  the 
purchaser,  or  he  stole  it;  it  was  obtained  in  exchange, 
and  represented  some  labor  or  service  performed  or  to 
be  performed  in  turn  by  the  purchaser.  We  may  there- 
fore eliminate  the  use  of  the  money  from  the  transac- 
tion altogether,  as  it  was  simply  used  as  a  convenience, 
as  oil  is  applied  to  the  axles  and  bearings  of  an  engine, 
to  make  the  movements  work  easy  and  with  the  mini- 
mum of  friction.  And,  eliminating  the  money,  the 
transaction  resolves  itself  into  an  exchange  of  the  labor 
or  services  of  the  shoemaker  for  the  labor  or  services  of 
the  man  who  desires  to  have  and  wear  shoes.  And,  as 
ewQYy  other  transaction  throughout  the  world,  by  which 
men  satisfy  their  wants  and  desires  by  producing  and 
exchanging,  or  buying  or  selling,  when  analyzed,  re- 
solves itself  into  identically  the  same  elements,  we  are 
led  up  to  the  recognition  and  acceptance  of  this  broad, 
general  principle,  namely,  that  all  trade  is  at  the  bottom 
a  matter  of  barter  :  product  being  given  for  product  and 
service  for  service ;  that  in  order  to  sell  we  must  buy, 


WHY    WE    TIRADE  AND  HOW   WE    TRADE. 


15 


and  in  order  to  buy  we  must  sell ;  and  that  he  who  won't 
buy  can't  sell,  and  he  who  won't  sell  can't  buy.  The 
facf  that  exchanges  take  place  indirectly  does  not  fur- 
thermore alter  the  principle  as  above  stated.* 


.  TROUBLE  NUMBER  ONE. 

Now,  to  come  back  to  the  more  immediately  practi- 
cal questions  under  consideration,  Why  is  there  no 
demand  for  the  multitude  of  useful  things  that  the 
United  States  hav6  the  facilities  for  producing  better 
and  cheaper  (as  can  be  demonstrated  beyond  all  ques- 
tion) than  other  countries  ?     Why  is  there  no  opportu- 


*  The  citation  of  authorities  in  support  of  so  plain  a  matter  is  obviously 
not  necessary,  but  the  following  may  interest :  "  Labor,"  says  Henry 
Carey,  "  (or  what  is  the  same  thing,  its  embodiment  in  the  form  of  pro- 
duct), is  the  first  price  given  for  everything  we  value,  and  it  is  the  com- 
modity that  all  have  to  offer  in  exchange.  The  ship,  the  road,  the  mill, 
and  money  are  all  portions  of  the  machinery  of  exchange,  not  the  things 
exchanged."  "  Others  mourn  over  the  cost  of  maintaining  the  currency, 
while  expatiating  on  the  advantages  of  canals  and  railroads,  not  perceiv- 
ing that  the  operation  of  the  two  are  identical." — Carey  on  Money. 

"Gold  and  silver,"  says  Ricardo,  "having  been  chosen  for  the  general 
medium  of  circulation,  they  are,  by  the  competition  of  commerce,  distrib- 
uted in  such  proportions  amongst  the  different  countries  of  the  world  as  to 
accommodate  themselves  to  the  natural  traffic  which  would  take  place  if 
no  such  metals  existed,  and  the  trade  between  countries  were  purely  a 
trade  of  barter.  .  .  .  It  is  thus  that  the  money  of  each  country  is  ap- 
portioned to  it  in  such  quantities  only  as  may  be  necessary  to  regulate  a 
profitable  trade  of  barter.  ,  .  .  Bounties  on  exportation  or  importa- 
tion, new  taxes  on  commodities,  sometimes  by  their  direct,  and  at  other 
times  by  their  indirect  operation,  distutb  the  natural  trade  of  barter^  and 
produce  a  consequent  necessity  of  importing  or  exporting  money,  in  order 
that  prices  may  be  accommodated  to  the  natural  course  of  commerce." — 
Ricardo,  Fiinciples  of  Political  Economy^  McCullocJts  edition,  pp.  TJ-Sl. 


'lp\ 


# 


i6 


IVffV    WE    TRADE  AND   HOW   WE   TRADE. 


nity  for  the   multitude   of  our  laborers,  who   ask   for 
nothing  else  than  that  they  may  have  the  opportunity 
to  support  themselves  by  producing,  and   are  now  de- 
nied that  opportunity  ?     One  answer  is,  that  the  United 
States,  for  now  a  long  series  of  years,  has,  in  its  fiscal 
policy,  denied  or  ignored  the  truth  of  the  above  econo- 
mic, axiomatic  principles.      It  has    not,  indeed,  in  so 
many  distinct  words  said  to  the  American  producers 
and  laborers.  You  shall  not  sell  your  products  and  your 
labor  to  the  people  of  other  countries  ;  but  it  has  em- 
phatically said  to  the  producers  and  laborers  of  other 
countries,  We  do  not  think  it  desirable  that  you  should 
sell  your  products  or  your  labor  in  this  country ;  and,  as 
far  as  we  can  interpose  legal   obstructions,  we  don't 
intend  that  you  shall !     But  in  shutting  others  out,  we 
have  at  the  same  time,  and  necessarily,  shut  ourselves 
in.    And  herein  is  trouble  No.   i.     The  house  is  too 
small,  measured  by  the  power  of  producing,  for  those 
that  live  in  it.     And  remedy  No.   I   is  to  be  found   in 
withdrawing  the  bolts,  taking  off  the  locks,  opening  the 
doors,  and  getting  out  and  clear  of  all  restrictions  on 
producing  and  the  disposal  of  products. 

In  fact,  the  country  is  very  much  in  the  condition  of 
a  merchant  who  has  a  store  advantageously  situated, 
and  its  shelves  filled  to  repletion  with  a  great  variety  of 
desirable  goods.  The  roads  that  lead  up  to  the  store 
are  in  admirable  condition,  with  good  sidewalks  and 
signboards  and  lamps  to  make  sure  that  no  one  goes 


PV//y    WE    TRADE  AND  HOW    WE    TRADE. 


17 


astray.  But,  when  customers  come  to  the  store,  they 
find  that  the  proprietor  has  taken  down  the  steps, 
walled  up  the  door,  and  made  it  so  troublesome  to  get 
in  that  they  prefer  to  journey  by  longer  and  worse 
roads  to  purchase  elsewhere.  Even  if  it  is  only  desired 
to  get  into  the  store,  7iot  for  the  sake  of  trading,  but  for 
conversing  with  the  proprietor  on  the  subject,  and 
showing  samples  of  what  the  outside  would  like  to  give 
for  what  the  inside  would  like  to  sell,  the  outsider  (as  in 
the  case  of  the  foreign  contributors  to  the  Philadelphia 
Exhibition  of  1876)  finds  to  his  cost  that  even  this  is  a 
very  troublesome  and  vexatious  matter.* 


■pi 
0 


*  The  irritation  of  the  Commissioners  of  every  nation  to  the  Inter- 
national Exhibition  at  Philadelphia  in  1876  at  the  annoyances  to  which 
they  were  subjected  by  the  United  States  Custom  House  regulations  was 
very  great,  and  openly  manifested  ;  and  it  was  universally  agreed  that 
nothing  similar  had  occurred  in  the  case  of  any  former  international  ex- 
hibition. On  this  subject  Mr.  Goshorn,  General  Superintendent,  thus 
expressed  himself  at  the  close  of  the  Exhibition  :  "The  administration  of 
the  customs  laws  gave  them  [the  foreign  exhibitors]  a  good  deal  of  annoy- 
ance which  I  could  not  obviatf .  The  customs  oflicials  never  compre- 
hended the  Exhibition.  Instead  of  regarding  it  as  exceptional  and 
peculiar,  they  treated  it  like  a  retail  shop,  and  tied  it  up  with  all  the  red 
tape  they  could  apply.  Besides,  there  was  a  want  of  harmony  between 
different  branches  of  the  customs  service,  which  added  to  the  troubles  of 
exhibitois."  The  catalogues  of  the  articles  contributed  by  one  country 
(the  Netherlands)  were  abandoned  in  the  New  York  Custom  House, "  sim- 
ply because  the  Commissioners  found  by  experience  that  the  time  required 
and  the  trouble  involved  in  having  them  passed  would  be  so  great  that  it 
was  not  worth  their  while  to  attempt  it."  Applicants  for  information 
were  accordingly  in  great  numbers  denied,  although  pages  printed  for 
the  express  purpose  of  giving  the  information  "  were  actually  on  our  soil 
and  in  charge  of  the  officers  of  the  government  on  w^hose  invitation  that 
exhibit  was  sent."    Great  sense  of  wrong  was  also  experienced  at  the 


3i 


J 8         WI/Y  WE   TRADE  AND  HOW   WE    TRADE^ 


now  THE  UNITED   STATES  TRADES  WITH  BRITISH 

NORTH   AMERICA. 

One  of  the  most  striking  illustrations  to  be  found  in 
all  history — one  that  is  going  to  stand  and  be  quoted 
for  all  time  in  treatises  on  political  economy — of  the 
evil  effect  of  commercial  restrictions  in  limiting  trade 
and  industry,  and  consequently  national  development, 
is  to  be  found  in  the  history  of  the  commercial  rela- 
tions between  the  United  States  and  the  British  North 
American  provinces.  Thus,  in  1852-53,  in  the  absence 
of  anything  like  commercial  freedom,  the  aggregate 
exchanges  between  the  two  countries  amounted  to  only 
$20,691,000.  The  subsequent  year  a  treaty  of  recipro- 
city went  into  effect,  whereby  the  people  of  the  two 
countries  were  enabled  to  trade  and  exchange  their 
products  with  little  or  no  obstruction  in  the  form  of 
import  duties.  The  result  was  that  the  aggregate  of 
exchanges  rose  the  very  first  year  of  the  operation  of 


close  c:"  the  Exhibition  by  the  refusal  of  the  Treasury  Department  to 
make  allowance,  in  payment  of  duties,  for  damage  of  goods  sustained 
through  exposure  or  lapse  of  time  at  the  Exhibition,  so  that  if  an  article, 
originally  costing  $20,000,  had  become  so  damaged  during  the  exhibition 
that  it  would  not  sell  for  $1,000,  it  must  needs  have  paid  duties  on  $20,000, 
or  be  sent  out  of  the  country.  A  certain  firm  of  foreign  exhibitors,  it  was 
reported,  made  two  immense  vases  to  show  what  they  could  do.  They 
had  to  build  new  kilns  large  enough  to  burn  them  in,  and  they  cost 
$T7,ooo  before  they  were  finished.  Nobody  would  buy  them,  even  for 
$1,000,  and  yet  these  vases  were  chargeable  with  a  duty  of  about  $6,500  if 
they  allowed  them  to  remain  in  the  country. 


PF//y   WE   TIRADE  AND  HOW    WE   TRADE. 


19 


the  treaty  from  $20,691,000  to  $33,494,000,  which  sub- 
sequently increased,  year  by  year,  until  it  reached  the 
figure  of  $55,000,000  in  1862-63,  and  $84,000,000  in 
1865-66."*  In  this  latter  year  the  treaty  of  reciprocity 
was  repealed,  and  restrictive  duties  again  became  opera- 
tive. The  resul*  was  that  the  annual  aggregate  of  ex- 
changes immediately  fell  to  $58,000,000 ;  and  in  1875, 
nine  full  years  after  the  expiration  of  the  treaty,  when 
both  nations  had  largely  increased  in  wealth  and  popu- 
lation, the  decrease  of  trade  consequent  on  the  abroga- 
tion of  the  treaty  had  been  but  little  more  than  made 
good  ;  the  probable  aggregate  for  1875  having  been 
about  $86,600,000. 

Again,  the  quantity  of  freight — meaning  thereby 
commodities  —  transported  on  the  railroads  of  the 
United  States,  is  at  present  at  the  rate  of  about  two 
hundred  millions  of  tons  per  annum  (for  the  year  1876, 
a  period  of  great  industrial  and  commercial  depression, 
197,082,000  tons).  If  we  assume  ^ach  ton  so  moved  to 
be  worth  on  an  average  but  $50  f  (a  low  estimate),  then 


*  It  is  not  to  be  concealed  that  during  the  last  year  of  the  reciprocity 
treaty,  or  after  a  serious  movement  had  been  made  for  its  abrogation, 
importations  from  the  Provinces  increased  in  anticipation  of  a  consequent 
renewal  of  the  United  States  tariff.  This  fact  does  not,  however,  affect 
the  general  result  stated  ;  the  exchanges  for  1863-64  being  more  than 
three  times  greater  than  those  of  1852-53,  the  year  before  the  ratification 
of  the  treaty. 

f  The  average  value  of  all  the  tonnage  moved  on  the  Erie  Canal,  as  re- 
turned by  the  State  Auditor  for  the  year  1876 — whic>f  tonnage,  it  is  well 
known,  is  made  up  mainly  of  bulky,  weighty  articles  of  comparatively 


90 


Py//y   IVE    TRADE  AND  HOW   WE    TRADE. 


the   value  of  the   exchanges   at   present  annually   ef- 
fected in  the  United  States,  through  the  agency  of  rail- 
roads  alone,  excluding  all   other  instrumentalities  of 
trade — boats,  ships,    wagons^  animals,  and    the  like — 
from  consideration,  is,  in  round  numbers,  ten  thousand 
•millions  of  dollars  ;  or,  to  state  it  differently,  if  the  pres- 
ent population  of  the  United  States  is  44,000,000,  then 
every  4,400,000  of  its  people  now  exchange  annually 
xrommodities  among  themselves,  through  the  agency  of 
railroads  alone,  to  the  value  of  a  thousand  millions  of 
dollars.     It  is  true  that  much  of  this  freight  is  trans- 
ported backward  and  forward  under  different  conditions 
and  forms  over  the  same  routes,  and  does  not  at  all  rep- 
resent  a  direct  movement  between  the  producers  and 
consumers  ;  but  it  is  safe  to  assume  that  not  one  ton  is 
transported  a  single  mile  except  for  the  real  or  sup- 
posed advantage  of  somebody,  representing  producer, 
exchanger,  or  consumer ;  and  that  producer,  exchanger, 
and  consumer  jointly  and  severally  know  what  they  are 
about,  and  wherein  is  their  interest,  better  than  any 
law-makers  can  tell  them. 

On  the   North  American    continent,  north   of    the 
United  States,  there  are  at  present  about  four  millions 


small  value-was  $29.50  per  ton.  Of  this  tonnage,  the  average  value  of 
products  of  the  forest  was  returned  at  $9.47  per  ton  ;  products  of  animals 
at  $284  per  ton ;  vegetable  food.  I30  per  ton ;  and  general  merchandise  at 
f  478  per  ton  Of  course  these  values  are  merely  approximative,  yet  they 
are  the  only  data  accessible  in  this  country  that  are  in  any  degree  founded 
on  investigation.  . 


W//Y   WE   TIRADE  AND  IIOIV   WE   TRADE. 


21 


of  people  (3,726,319  in  1 871)  inhabiting  the  British  Pro- 
vinces.    The  line  which  separates  these  Provinces  from 
the  United  States  is  purely  artificial  and  not  natural ; 
and  except  where  a  lake  or  river   has   been  accepted 
and  named  as  the  boundary,  no  one   can  readily  tell 
where  one  country  begins  or  the  other  ends.    It  stands, 
therefore,  to  reason,  that  were  it  not  for  artificial  barri- 
ers, arbitrarily  set  up  by  legislation,  men  and  commodi- 
ties would   pass   as  freely  between  the  two  countries 
as   they  now    do    between    different    sections   of  the 
Provinces,   or    between    the     different   States   of   the 
American  Union,  and  that  the  methods  and  amount  of 
trade  over  the  whole  territory  under  the  two  govern- 
ments would  be  uniformly  subject  to  the  same  influ- 
ences.  But  the  United  States,  with  a  view  of  promoting 
national   industry  and  effecting  national   development, 
has  been  mainly  instrumental  in  establishing  all  manner 
of  arbitrary  and  burdensome  restrictions  on  trade  and 
commercial  intercourse  along  this  artificial  or  imaginary 
line  separating  the  two  countries.     And  now  will  the 
people  of  the  United  States,  divesting  themselves  of 
prejudice,  stop  for  a  brief  moment  and  consider  the  re- 
sult ?     It  is  very  interesting,  very  instructive,  finds  few 
parallels  in  modern  commercial  experience,  and  may  all 
be  summed  up  in  the  following  brief  statement :     The 
aggregate  value  of  all  the  exchanges  between  the  4,000,- 
000  of  people    in   the  Dominion  of  Canada,  and   the 
44,000,000  of  people  in  the  Unitec  States,  for  the  year 


*!■ 


33 


IV//V   WE    TRADE  AXD  I/O  IV   WE   TRADE, 


1875  (the  latest  year  for  which  we  have  returns), 
through  every  variety  of  instrumentality,  was  only 
$86,000,000  ;  while,  as  before  shown,  every  4,400,000  of 
people  on  the  United  States  side  of  the  line,  under  the 
condition  of  perfect  internal  free  trade,  effected  ex- 
changes between  themselves,  through  the  agency  of 
railroads  alone,  to  the  extent  of  $1,000,000,000.  Sup- 
pose, now,  these  barriers  to  trade  between  the  United 
States  and  Canada  had  been  taken  down.  How  many 
wheels,  spindles,  hammers,  cars,  boats,  engines,  and 
strong  human  arms  would  in  consequence  have  been 
put  in  motion,  and  how  much  of  the  present  industrial 
and  commercial  depression  in  the  United  States  would 
have  been  obviated  ? 

Does  the  United  States  now  desire  to  augment  its 
present  aggregate  trade  to  the  extent  of  many  hundreds 
of  millions  per  annum  ?  The  way  stands  open,  and  it 
only  remains  for  the  people  of  the  United  States  who 
are  suffering  for  lack  of  employment,  and  who  complain 
that  there  is  no  demand  for  the  products  of  their  indus- 
try, to  signify  that  it  is  their  wish,  and  it  will  be  done. 
The  people  of  the  British  Provinces  are  only  too  ready 
to  enter  into  reciprocal  and  general  commercial  arrange- 
ments with  ihe  people  of  the  United  States  which  will 
result  in  such  augmentation  of  trade ;  and  there  is  no 
ear  more  quick  lO  listen  and  respond  to  the  demands  of 
the  people  than  the  representatives  of  the  people  in 
Congress  assembled.     Selfish  private  interests,  on  both 


IV//Y   WE   TRADE  AND  HOW  WE   TRADE.  2$ 

sides  of  the  line,  will  promptly  respond,  as  they  have 
lieretofore,^  that  it  is  not  desirable  that  any  such  com- 
mercial arrangement  as  is  p'-oposed  should  be  entered 
into.  But  let  the  people  as  a  whole  consider  the  facts 
in  the  case  as  a  whole,  and  they  cannot  be  long  in  decid- 
ing wherein  to  them  is  the  path  of  profit  and  expedi- 
ency. 

Is  it  desired  to  nnnex  the  British  North  American 
Provinces  and  make  them  a  part  of  the  American 
Union  ?  We  have  as  a  nation  for  long  years  past,  in 
our  dealings  with  Canada,  been  playing  the  part  of  the 
wind,  in  the  contest  between  the  wind  and  the  sun  in 
the  fable,  to  see  which  could  make  the  traveler  soonest 
take  off  his  coat.  Suppose  as  a  nation  we  now  for  a 
while  put  aside  the  role  of  the  wind  and  assume  the 
part  of  the  sun.  With  the  balance  of  advantage  in 
any  amicable  contest  between  the  two  countries  for  in- 

*  At  a  convention  of  persons  interested  in  the  manufacture  of  pig  iron, 
held  in  Philadelphia,  December,  1874,  the  following  resolutions  were 
unanimously  adopted  :— 

'^  Resohed,  That  this  convention,  representing  the  Pig  Iron  Maniifnc- 
turers  of  this  country,  earnestly  protest  against  the  ratification  of  the  pro- 
posed reciprocity  treaty  with  Canada,  believing  that  such  treaty,  if  rati- 
fied, would  result  in  completely  breaking  down  the  harriers  which  now 
exist  against  the  introduction  to  our  markets  of  ihe  products  of  low- 
priced  European  labor,  in  disastrously  impairing  the  revenues  of  the 
Government,  in  preventing  the  payment  of  the  interest  on  our  national 
debt,  and  in  continuing  indefinitely  the  general  distress  which  now  pre- 
vails." 

It  is  possible  to  quote  from  the  proceedings  of  some  Canadian  conven- 
tions resolutions  that  are  so  similar  in  prophesying  bad  results  to  Canada, 
from  reciprocity,  that  the  one  would  seem  to  have  been  borrowed  from 
the  other. 


?4  ^^^y  ^V^    TRADE  AND  HO  IV    WE    TRADE. 

dustrial  and  commercial  betterment  so  transcendently 
on  the  side  of  the  richer,  most  populous,  and  most  pow- 
erful nation,*  it  must  be  a  very  low  order  of  statesman- 
ship on  the  part  of  the  United  States  which  could  not 
devise  and  carry  out  a  policy  that  in  less  than  a  decade 
of  years  would  make  the  British  Provinces  applicants 
of  their  own  accord  for  incorporation  as  States  in  the 
American  Union,  or  would  enable  the  United  States,  if 
it  was  deemed  expedient,  to  force  them  to  become 
such,  by  the  threat,  not  of  armed  compulsion,  but  of 
simply  clouding  the  sun.f 


*  The  extent  to  which  Canada  is  necessarily  dependent  on  the  United 
States  for  prosperity  is  well  illustrated  by  the  following  extract  from  the 
"Budget  Speech"  of  the  Minister  of  Finance,  Hon.  Richard  J.  Cart- 
wright,  before  the  Canadian  House  of  Commons,  February,  1875  :  "  Our 
distress  (industrial  and  commercial)  has  been  considerably  aggravated  by 
external  causes  over  which  we  had  no  sort  of  control.  The  House  knows 
that  the  people  of  the  United  States  have  been  laboring  for  two  or  three 
yervs  under  most  unusual  depression.  The  House  knows,  also,  that  it  is 
quite  impossible  for  a  small  community  like  ours,  placed  as  it  is  in  the 
immediate  vicinity  of  a  '  reat  nation  of  forty-four  millions  of  people,  bor^ 
dering  on  us  lor  two  or  three  thousand  miles, — the  House  knows,  I  say, 
that  it  is  quite  hnpossibie  that  any  long-continued  permanent  depression 
can  exist  in  the  United  States  without  reacting  very  povi^erfully  upon  u?. 
We  know  that  when  the  prices  of  American  staples  are  high,  ours  will  be 
high  also.  When  bbor  is  dear  in  the  United  States,  it  will  be  dear  in  Can- 
ada ;  wheii  cheap,  it  wi''  tend  powerfully  to  make  it  cheap  in  Canada  also. 

f  The  mass  of  the  pcopl ;  of  the  United  States,,  occupied  with  their 
private  cares  and  business,  and  giving  but  comparatively  little  attention 
to  the  details  of  our  foreign  relations,  probably  do  not  know,  what  iv  is 
full  time  tney  should  know,  that  the  policy  of  the  United  States  toward 
the  British  Provinces  has  for  a  series  of  years  been  anything  but  generous 
and  worthy  of  a  great  people.  Thus,  by  the  treaty  of  1871  between  the 
United  States  and  Great  Britain,  it  was  agreed  that  "  fish  of  all  kinds,  the 


iMHiiiiiiliiii 


fV/iV   WE    TRADE  AND  HOW   WE   TRADE. 


25 


Thus,  to  illustrate,  let  us  imagine  what  might  be. 
North  of  Lakes  Erie  and  Ontario  and  the  river  St.  Law- 
rence, east  of  Lake  Huron,  south  of  the  forty-fifth  par- 
allel, and  included  mainly  within  the  present  Dominion 

produce  of  the  fisheries  of  the  Dominion  of  Canada,  shall  be  ac'mitted  into 
the  United  States  free  of  duty,  fish  caught  in  inland  waters  and  fish  packed 
in  oil  excepted."  But  in  1875  Congress,  under  the  influence  exerted  in 
behalf  of  the  canned  salmon  interest,  imposed  a  duty  of  a  cent  and  a  half 
on  each  quart  of  contents  of  "cans  or  packages  made  of  tin  or  other 
material  containing  fish  of  any  kind  admitted  free  of  duty  under  any  exist- 
ing law  or  treaty,"  the  effect  of  which  was  to  nullify,  by  a  small  and  mean 
device,  an  essential  part  of  the  stipulated  provisions  of  the  trf.aty;  and  all 
remonstrances  on  the  part  of  .the  Dominion  Government  against  such 
enaciment  has  thus  far  availed  nothing.  Had  a  similar  act,  adverse  to  the 
interest  of  the  United  States,  been  perpetrated  by  any  foreign  State,  words 
could  hardly  be  found  to  express  the  extent  of  American  indignation  for 
so  intentional  a  violation  of  solemn  public  engagements,  and  the  Govern- 
ment at  Washington  would  have  been  quick  to  demand  reparation 

Again,  under  the  pi'ovisions  of  the  existing  treaty,  all  sea-Jish,  the  prod- 
uct of  the  Dominion  fisheries,  fresh,  dry,  or  preserved  in  any  way, 
except  in  oil,  are  admitted  into  the  United  States  free  of  duty.  Under 
\.\\c  existing  tariff  a\\  fresh ^sh,  intended  for  immediate  consumption,  wher- 
ever caught,  are  also  admitted  to  free  entry.  But  within  the  present  year 
(1877)  the  Treasury  Department  has  ruled  that  if  fresh  fish  imported  from 
Canada  into  the  United  States  are  packed  in  ice  (simply  in  order  that 
they  may  be  transported  to  greater  distances  and  supply  the  immediate 
demands  of  more  inland  markets),  the  fish  in  such  cases  do  not  then 
answer  to  the  conditions  for  immediate  consumption,  and  ore,  therefore! 
subject  to  varying  rates  of  duty,  according  to  their  species. 

Article  XXVII.  of  the  same  treaty  provided  that  the  British  Government 
wonld  urge  upon  the  Government  of  Canada  to  secure  to  the  citizens  of  the 
United  States  the  use  of  the  canals  "  in  the  Dominion  on  terms  of  equality 
with  the  inhabitants  of  the  Dominion,"  and  the  United  States  in  turn 
engaged  to  urge  upon  the  State  Governments  to  secure  to  the  subjects  of 
Great  Britain  "the  use  of  the  several  State  canals  connected  with  the 
navigation  of  the  lakes  and  rivers  traversed  by  or  contiguous  to  the  boun- 
dary line  between  the  possessions  of  the  contracting  parties  on  terms  of 


4 


Z6         WHY   WE   TRADE  AND  HOW   WE   TRADE. 

Province  of  Ontario,  there  is  as  fair  a  country  as  exists 
on  the  North  American  continent ;  nearly  as  large  in 
area  as  New  York,  Pennsylvania,  and  Ohio  combined, 
and   equal,  if  not  superior,  as  a  whole,  to  these  States 


equality  with  tiie  inhabitants  of  the  United  States."  At  vhe  same  time  the 
fr.-e  navigation  of  the  St.  Lawrence  Rivei  was  guarante  \  by  Great  Britain 
to  the  United  States.  Immediately  after  the  ratification  of  the  treaty  the 
British  and  Colonial  Governments  made  haste  to  carry  out  the  stipulations 
on  their  part  in  these  respects.  The  St.  Lawrence  was  made  free,  and 
the  privileges  of  the  Canadian  canals  were  granted  to  American  vessels 
on  the  payment  of  tolls  that  barely  covered  the  cost  of  wages  and  repairs. 
But  up  to  the  present  time  the  Government  of  the  United  States  have  not 
only  failed  to  ^o  anything  to  facilitate  the  transit  of  Canadian  commerce 
through  the  States,  but  they  have  omitted  no  opportunity  to  harass  and 
obstruct  it.  Thus,  the  Federal  Government  (last  administration)  has  so 
construed  the  Washington  treaty  of  1871  as  to  withhold  from  Dominion 
vessels  with  cargo  the  privilege  to  load  in  Canadian  ports  for  New  York 
and  other  ports  on  the  Hudson  River  ;  in  consequence  of  which  any  mer- 
chandise transported  in  a  Canadian  bottom  can  only  be  taken  as  far  as 
Albany,  and  be  there  entered  at  customs  and  transhipped  into  a  Ur'ited 


States  vessel  for  transportation  to  its  destination. 


r«.-' 


hnically,  the  privi- 


lege to  use  the  canals  does  not  necessarily  imply  the  use  of  rivers  con- 
necting therewith  ;  but  in  the  case  in  question,  the  New  York  canal^•, 
which  the  Canadians  desire  to  use,  constitute,  in  connection  with  the 
Hudson  River,  a  great  marine  highway  between  Canadian  ports  on  the 
St.  Lawrence  and  the  Great  Lakes  and  the  United  States  ports  on  the 
Huds-on  River  and  seaboard,  and  the  cutting  off  of  any  one  link  or  sec-- 
tion  renders  the  remainder  nearly,  if  not  quite,  practically  useless.  In  a 
precisely  similar  case,  namely,  that  of  the  Ottawa  River  and  the  Gren- 
ville  Canal,  the  Dominion  Government  have  acceded  to  vessels  of  the 
United  States  every  privilege  enjoyed  by  Canadian  vessels,  and  apparently 
have  never  thought  that  any  other  intei*pretation  of  the  treaty  could  be 
honestly  contemplated. 

It  was  also  provided  in  the  same  treaty  that  the  value  of  the  privilege 
then  conceded  to  the  inhabitants  of  the  United  States  by  Great  Britain, 
t )  take  fish  on  the  coasts  of  the  British  North  American  Colonies  ^vithout 
being  restricted,  as  formerly,  to  a  certain  distance  from  the  shore,  should 


WHY   WE    TRADE  AND  HOW   WE   TRADE. 


27 


in  its  agricu-ltural  capacity.  It  is  the  natural  habitat  on 
this  continent  of  the  combing-wool  sheep,  without  a 
ull,  cheap,  and  reliable  supply  of  the  wool  of  which 
species  the  great  worsted  manufacturing  interest  of  the 
country  cannot  prosper,  or,  we  should  rather  say,  exist. 
It  is  the  land  where  grows  the  finest  barley,  which  the 
brewing  interest  of  the  United  States  must  have  if  it 
ever  expects  to  rival  Great  Britain  in  its  present  annual 
export  of  over  eleven  millions  of  dollars'  worth  of  malt 
products.  It  raises  and  grazes  the  finest  of  cattle,  with 
qualities  especially  desirable  to  make  good  the  deteri- 
oration of  stock  in  other  sections ;  and  its  climatic  con- 
ditions, created  by  an  almost  encirclement  of  the  Great 
Lakes,  especially  fit  it  to  grow  men.* 

Such  a  country  is  one  of  the  greatest  gifts  of  Provi- 
dence to  the  human  race  ;  better  than  bonanzas  of 
silver,  or  rivers  whose  sands  contain  gold.     Is  it  desir- 


be  determined  by  commissioners  to  be  appointed  by  the  respective  par- 
ties. Six  years  have  now  elapsed  since  the  ratification  of  the  treat/,  and 
although  the  subject  has  been  repeatedly  pressec^  upon  the  attention  of  the 
Federal  authorities,  it  is  only  within  the  present  year  (1877)  that  the  United 
States  has  been  willing  to  comply  with  its  agreement  and  appoint  a  com- 
missioner to  take  part  in  the  stipulated  determination. 

*  "  Ontario  possesses  a  ferfility  with  which  no  part  of  New  England 
can  at  all  compare ;  and  that  particular  section  of  it  around  which  the 
circle  of  the  Great  Lakes  is  swept  forces  itself  upon  the  notice  of  any 
student  of  the  American  map  as  one  of  the  most  favored  spots  of  the 
whole  continent,  where  population  ought  to  breed  wif'i  almost  Belgian 
fecundity. " — Report  on  the  Trade  between  the  United  States  and  the  British 
Possessions  in  North  America,  by  J.  R.  Larned,  Treasury  Department^ 
Washington,  1 871. 


'"W^f"'^^^W!^P"BP"HPPp 


mm 


mmm 


28 


IFI/y   WE    TRADE  AND  HOW   WE    TRADE. 


able  for  the  United  States  to  own  it,  and  incorporate  it 
uS  an  integral  part  of  the  Union  ?    It  can  be  done.   We 
have  only  to  march  an  arnny  across  the  border,  intrench 
and  take  possession, — but  not  an  army  equipped  with 
implements  of  war,  to  deprive  rightful  owners  of  lawful 
possession,  and  to  b^  welcomed  in  turn  by  the  Cana- 
dians with  "bloody  hands  to  hospitable  graves;"  but 
an  army  with  plows  and  reapers  and  all  manner  of  other 
improved   tools  for  all   manner  of  useful  production, 
with  American  capital  and  American  ideas,  to  be  wel- 
comed by  the  Canadians  to  peaceful  homes  and  condi- 
tions of  abundance.    At  present  this  land,  so  favored 
by  nature,  is  in  a  great  measure  unoccupied  and  sparse- 
ly populated,  because  there  is  little  market  for  the  prod- 
ucts of  its  industrj^  and  the  United  States  by  its  policy 
has  practically  said  there  shall  be  none.     Thus  emigra- 
tion and  settlement  from  without  (Europe  as  well  as  the 
United  States)  has  been  discouraged.     With  an  area,  as 
before  stated,  nearly  equal  to  that  of  the  three  great 
States  of  New  York,   Pennsylvania,   and  Ohio,  which 
now  hnve  a  population  of  about  twelve  millions,  the 
present  population  of  Ontario  is  less  than  two  millions. 
During  the  period  of  the  operation  of  the  reciprocity* 
treaty  before  the  war,  the  ratio  of  its  increase  of  popu- 
lation was  at  the  rate  of  4.38  per  cent,  per  annum,  or  in 
a  xatio  greater  than  that  of  the  United  States  at  any 
period  of  its  history  ;  but  after  the  outbreak  of  our  war 
and  the  repeal  of  reciprocity  (or  from  1861   to   1871), 


}F//y    WE   TRADE  AND  IIOIV   WE    TRADE. 


29 


this  annual  ratio  of  increase  ran  down  to  1.6 1,  or  to  a 
ratio  less  than  that  of  the  United  States  at  any  period 
of  its  history.  Let  all  barriers  to  free  commercial  inter- 
course and  the  exchange  of  products  be  now  removed, 
and  who  can  doubt  that  in  the  course  of  one  or  two 
decades  (and  what  are  ten  or  twenty  years  in  the  life  of 
a  nation  ?)  there  will  be  gathered  in  what  is  now  Ontario 
the  material  for  several  great  and  prosperous  States ; 
States  whose  population  originating  mainly  \a  the 
United  States  and  connected  with  them  by  ties  of  blood, 
kindred,  and  similarity  of  thought — which  free  inter- 
course v/ill  annually  strengthen  and  not  weaken — will 
be  American  rather  than  Provincial ;  States  whose  peo- 
ple, under  the  representative  government  now  enjoyed 
in  Canada,  will  largely  determine  the  policy  of  the 
whole  Dominion,  and  which  will  gravitate  to  incorpora- 
tion with  the  American  Union  as  naturally  as  rivers 
seek  to  incorporate  themselves  with  the  sea. 

But  supposing  the  policy  indicated  to  have  been 
entered  upon  by  the  United  States,  and,  the  anticipated 
results  of  development  having  been  speedily  attained, 
the  new  States  across  the  border,  or  indeed  the  entire 
Dominion,  should  not  then  desire  to  become  politically 
united  with  us?  The  answer  to  this  would  be,  first,, 
that  if  statecraft  had  done  its  whole  duty  in  making  the 
interests  of  the  two  countries  common,  such  an  opposi- 
tion probably  would  not"  exist.  But  if  it  should,  it 
seems  haraly  necessary  to  enter  into  an  argument  to 


WHY    >VE    TRADE  AND  HOW    WE    TRADE. 


m 


prove  that  the  United  States  could  then  so  modify  its 
commercial  policy  as  respects  Canada  as  to  peacefully 
and  powerfully  influence  such  a  union,  if  it  was  desired ; 
and  that  th^  n,  and  not  now,  would  be  the  time  to  enac- 
restrictive  laws — if  such  mean,  selfish  laws  are  ever  de- 
sirable— touching  the  intercourse  and  trade  between  the 
two  countries,  with  the  expectation  of  thereby  promot- 
ing annexation  of  the  Provinces. 

But  why  should  we  ever  desire  to  force  the  Canadas, 
or  the  possessors  of  any  oth  r  now  foreign  territory  to 
become  part  and  parcel  of  the  American  Union  against 
their  will  ?  With  the  single  exception  of  the  satisfac- 
tion of  a  brutal,  heathenish  sort  of  feeling  which  re- 
joices in  the  extension  of  dominion  and  the  enlargement 
of  territory  as  evidences  of  the  possession  of  physical 
power,  there  is  not  one  single  advantage  which  could 
come  to  the  United  States  from  Canada  annexed,  which 
might  not  in  an  equal  degree  be  made  to  accrue,  under 
a  rational  system  of  economic  laws,  from  Canada  inde- 
pendent. Can  any  one  point  out  how,  with  free  com- 
merce, a  peace  policy,  and  a  free  popular  representative 
government,  the  building  up  of  one,  two,  or  three  great 
States  on  the  north  side  of  the  Lakes  under  one  flag 
would  be  less  advantageous  than  the  building  up  of  a 
similar  number  of  States  on  the  south  side  of  the  Lakes 
under  another  and  different  flag?  In  the  absence  of  all 
restrictions  on  commercial  intercourse,  the  people  of 
New  York,  Pennsylvania,  and  Ohio  trade  among  them- 


PVI/Y  WE    TIRADE  AND  HOW    WE    TRADE. 


31 


selves — and  the  rv.st  of  the  Union  when  it  suits  their 
interest ;  and  when  it  does  not  suit,  they  desist.  Under 
similar  conditions  of  freedom  the  Canadian  States,  pres- 
ent and  future,  obeying  a  common  law  of  self-interest, 
would  act  in  the  same  manner.  Whatever  products  of 
labor  the  one  at  any  time  desired  to  sell  to  the  other 
could  only  be  sold  by  receiving  in  exchange  an  equiva- 
lent amount  of  labor  of  the  other,  and  if  the  exchange 
was  not  mutually  advantageous  and  profitable,  it  would 
not  be  continued.*  Under  a  ZoUverein  system,  such 
as  has  been  proposed,  and  is  without  doubt  practical, 
the  national  taxation  of  the  two  countries  could  practi- 
cally be  made  the  same ;  while  in  respect  to  all  other 
taxation,  each  State  or  locality  would  adopt,  as  now, 
that  system  which  seemed  to  it  most  expedient,  and 
would  come  in  time  to  learn  that  all  taxation  by  diffu- 
sion of  all  kinds  ultimately  falls  on  consumption. 

*  As  au  additional  illustration  of  a  circumstance,  often  before  noticed, 
of  the  difficulty  witli  which  a  mind  which  has  once  accepted  narrow, 
selfish  views  in  respect  to  trade,  commerce,  and  international  relations, 
can  thereafter  reason  about  any  of  these  subjects  except  from  a  similar 
standpoint,  it  may  be  here  mentioned,  that  wh-n  the  substance  of  this 
essay  first  appeared  in  the  North  American  Review  (September,  1877),  the 
Editor  of  one  of  the  public  journals  of  Nova  Scotia  {Halifax  Herald) 
took  the  writer  to  task  for  teaching  a  code  of  doubtful  international 
morality;  of  endeavoring  to  delude  Canada  into  reciprocity,  ^'^^  ^^'^^ 
to  subsequently  "destroy  all  the  channels  of  our  [her]  trade,  and Jil  and 
occupy  all  our  [her]  foreign  markets."  Such  persons  have  no  difficulty  m 
perceiving  that  a  trade  between  different  districts  of  the  same  State  is  but 
an  exchange  of  equivalents  and  is  always  beneficial,  and  not  a  tracle  by 
which  one  gaii.s  and  the  other  loses;  or  by  which  in  Canada,  Nova 
Scotia  is  enriched  at  the  expense  of  New  Brunswick.    But  when  it  comes 


■I 


*V:\^^^  „r-r^^  ,A' 


«)  PVffY   IVE   TRADE  AND  HOW   WE    TRADE. 

But,  reasoning  froni  general   principles,  how  much 
longer,  it  may  be  asked,  are  we  to  read  from  the  pages 
of  the  Book  we  profess  as  a  nation  to  believe,  that  God 
has  made  of  one  blood  all  the  nations  of  the  earth,  and 
then  turn  away  and  act  as  though  there  was  not  a  word 
of  truth   in  the   averment?      How  much  longer  shall, 
we  turn  the  pages  of  European  experience  during  the 
seventeenth,  eighteenth,  and  a  good  part  of  the  nine- 
teenth century,   before  we  learn  that  the  planting  of 
colonies  and  the  acquisition  of  territory  for  the  purpose 
of  compelling  trade  and   profiting  by  advantages  not 
accorded  to  other  nations,  has  been  a  business  far  more 
productive  of  evil  than  of  good  ?  And  when  as  a  nation 
shall  we  comprehend  enough  of  the  elements  of  polit- 
ical economy  to  understand,  what  it  would  seem  ought 
to  come  through  intuition,  "  that  if  commerce  is  allowed 
to  be  free,  its  advantages  will  be  shared  by  every  coun- 
try that  engages  in  it ;  that  in  the  absence  of  monopoly 
the  benefits  of  trade  are  of  necessity  reciprocal ;    and 
that  in  a  mercantile  point  of  view  it  would  be  as  absurd 
to   attempt   to   impoverish   a   people   with   whom   we 
trade  "  (as  we  have  attempted  to  impoverish  Canada), 
''as  it  would  be  for  a  tradesman  to  work  for  the  insolv- 
ency of  a  rich  and  frequent  customer  "  (Buckle).* 

to  a  question  of  foreign  trade,  then  the  conditions  to  such  a  mind  appear 
altogether  different ;   and  one  who  seeks  to  enlarge  international  trade 
and  commerce,  and  break  down  the  barriers  cf  race  and  country,  becomes 
regarded  almost  in  the  light  of  an  enemy. 
*  "  The  grent  producing  regions  of  the  Dominion,  which  we  formerly 


PV//y    WE    TRADE  AND  HOW   WE    TRADE. 


33 


Left  to  itself,  the  average  human  mind  must,  it  would 
seem,  receive  and  act  upon  these  truths  as  if  by  intui- 
tion ;  and  that  it  does  so  tend  to  act  finds  a  curious 
illustration  in  an  extract  from  the  last  annual  message 
of  General  Grant  as  President  of  the  United  States. 

General  Grant,  it  is  well  known,  in  the  earlier  years 
of  his  Presidency,  without  apparently  having  ever  con- 


knew  as  Upper  and  Lower  Canada,  have  no  Atlantic  ports  ;  they  have, 
however,  one  capital  advantage  over  us  in  their  mighty  St.  Lawrence, 
which  affords  a  water-line  navigable  for  a  ship  of  1,000  tons,  2,500  miles 
inland  to  the  very  centre  of  the  continent.  This  great  water-way,  having 
its  outlet  on  the  fiftieth  parallel,  is  closed  to  them  for  nearly  half  the  year. 
This  alone  has  prevented  the  Canadas  from  rising  to  the  condition  of  a 
first-class  State  ;  for  the  practicable  and  only  proper  commercial  outlets  to 
the  great  river,  for  climatic  reasons,  are  the  luxrbors  of  Boston,  ."ortland, 
and  New  York.  On  the  other  hand,  this  great  water-way,  even  when  free 
from  ice,  and  flowing  ready  to  serve  the  Western  Slates,  as  their  outlet  to" 
the  ocean,  is  closed  by  a  barrier  far  worse  than  ice,  that  of  the  prejudice 
and  non-intercourse  worked  by  bad  statutes.  The  Almighty  made  the 
great  plains  of  the  West  and  of  the  Canadas  for  the  habitation  of  his 
children.  Between  them  and  the  ocean  he  raised  the  great  Laurentian 
chain  of  mountains  which  we  know  as  the  Appalachian  range.  On  the 
north  he  opened  the  river  St.  Lawrence^  and  through  the  frequent  gaps 
in  the  mountains  the  way  for  our  iron  roads  has  been  discovered.  As  one 
country,  each  section  would  have  supplemented  and  benefited  the  other ; 
but  men  in  their  ignorance  and  prejudices  have  frozen  the  rive'-  after  the  ice 
itself  had  floated  away,  and  have  closed  the  gaps  in  the  mountain  chains, 
even  after  the  iron  road  had  been  .laid  down  in  them.  Are  there  words 
to  express  the  folly  of  those  who  would  reconstmct  the  continent  more 
fitly  than  it  has  pleased  the  Almighty  to  do  it  ?  Are  those  men  statesmen 
or  blind  idiots  who  render  the  labor  of  man  more  arduous,  who  double 
the  sweat  of  the  brow,  and  serve  but  half  the  loaf  that  might  be  eaten  ? 
These  are  not  mere  questions  of  a  dollar,  more  or  less,  but  they  are  ques- 
tions that  lie  at  the  foundation  of  human  society,  and  that  are  a  part  of 
social  ethics."— Edward  Atkinson,  Address  before  the  Boston  Board  of 
Trade,  1874. 
2* 


34 


lV//y   IVE   TRADE  AND  IIOIV   WE    TRADE. 


sidcred  the  danger  of  further  politically  incorporating 
with  us  as  a  nation .  races  and  States  that  we  cannot 
politically  assimilate  or  digest,  earnestly  desired  to  an- 
nex San  Domingo,  and  make  it  n  part  of  the  United 
States.     The  scheme    failed  to   receive   the   assent  of 
either  Congress  or  the  nation,  and   consequently  f^iiled  ; 
but,  recurring  to  it  in  his  last  message,  General  Grant 
maintained  that  if  "  my  views  [about  annexation]  had 
been   concurred    in,  the  country  would  be  in  a   more 
prosperous  condition  to-day,  both  politically  and   finan- 
cially."     And  for   this   belief  he   gives   the  following 
reasons:  *' Santo  Domingo  is  fertile,  and  upon  its  soil 
may  be  grown  just  those  tropical  products  of  v/hich  the 
United   States  use  so  much,  and  which  are  produced 
and  prepared  for  market  now  by  slave  labor  almost  ex- 
clusively, namely,  sugar,  coffee,  dyewoods,  mahogany, 
tropical   fruits,   tobacco,    etc."      He.  next   proceeds  to 
show,  that  of  the  above-enumerated  useful  commodi- 
ties, Cuba  and  Brazil  furnish  the  United  States  at  pres- 
ent with  the  larger  portion  of  their  needed  supplies ; 
but   that   legislation,   **  particularly  in  Cuba,"  is  "  un- 
favorable  to  a  mutual  exchange   of  the   products   of 
each  country."    San  Domingo  annexed,  the  following 
changes,  in  the  opinion   of  General  Grant,  would  im- 
mediately occur:  "All  that  is  produced  in  Cuba  could 
be  produced  in  Santo  Domingo.     Being  a  part  of  the 
United  States,  commerce  between  the  island  and  main- 
land would  be  free ;  there  would  be  no  export  duties  on 


tV//y    IVE    TRADE  AND  HOW   WE    TRADE. 


35 


her  shipments,  nor  import  duties  on  those  coming-  here. 
There  ivould  be  no  import  duties  upon  the  supplies,  ma- 
chinery ^  etc.,  going  from  the  States."  All  restrictions 
on  commercial  intercourse  being  removed,  "  hundreds 
of  American  vessels,"  he  continues,  "  would  now  be  ad- 
vantageously used  in  transporting  the  valuable  woods 
and  other  products  of  the  soil  of  the  island  to  a  market, 
and  in  carrying  supplies  and  emigrants  to  it.  The 
island  is  but  sparsely  set^^^'^d,  while  it  has  an  area  suffi- 
cient for  the  profitable  employment  of  several  millions 
of  peop'e.  The  soil  would  have  soon  fallen  into  the 
hands  of  United  States  capitalists.  The  products  are 
so  valuable  in  commerce  that  emigration  there  would 
have  been  encouraged.  The  emancipated  race  of  the 
South  would  have  found  there  a  congenial  home,  and 
where  their  labor  would  be  so  much  sought  after  that 
the  poorest  among  them  could  have  found  the  means 
to  go." 

Whether  all  these  glowing  anticipations  would  have 
been  speedily  realized  had  the  proposed  scheme  of  an- 
nexation been  carried  out,  may  well  be  doubted.  But, 
apart  from  matters  of  conjecture,  it  is  interesting  to 
note  how  quick  and  keen  a  mind,  which  showed  it- 
self so  little  acquainted  with  industrial  and  commercial 
matters  as  that  of  General  Grant,  was  to  discern  the 
bertefit  that  might  follow  the  removal  of  all  restrictions 
on  exports  and  imports  and  intercommunication  be- 
tween the  United   States  and   the  island  of  San  Do- 


.llL 


vA 


mm 


•^mm 


36 


fF//y   IV E    TRADE  A,VD  I/Oiy   IVE   TRADE, 


mingo;  and  at  the  same  time  how  utterly  incapable  it 
was  to  perceive  that  it  was  not  necessary  for  the  United 
States  to  annex  and  own  San  Domingo  to  secure  such 
a  degree  of  commercial  freedom  between  the  two  coun- 
tries ;  that  all  barriers  in  the  way  of  attaining  such  a 
result  were  not  natural,  but  mainly  and  artificially  cre- 
ated by  the  legislation  of  the  United  States ;  and  that 
there  was  nothing  which  the  people  and  government  of 
San  Domingo  would  do  more  willingly  than  to  admit 
every  product  of  the  United  States,  free  of  impost,  into 
their  ports,  and  accord  all  manner  of  other  privileges 
to  citizens  of  the  United  States  on  their  island,  on  con- 
dition that  the  latter  country  would,  in  turn,  allow  the 
peculiar  products  of  San  Domingo  to  be  imported  into 
the  United  States  on  the  tei.ns  that  they  would  be  had 
the  scheme  of  annexation  been  perfected,  that  is,  free 
of  duty. 

The  effect  of  arbitrary  legislative  restrictions  on  the 
international  exchanges  between  the  United  States  and 
the  British  Provinces,  in  hampering  and  diminishing  the 
general  bi"^;.'2ss  of  the  country,  has  been  pointed  out; 
but  the  effect  of  such  restrictions  on  particular  branches 
of  business,  obtained  by  analyzing  the  details  of  such 
exchanges,  are  equally  significant  and  instructive.  The 
case  of  the  export  of  manufactured  lumber  is  especially 
a  case  in  point.  Thus  before  the  expiration  of  the 
reciprocity  treaty  between  the  United  States  and  Can- 
ada,  in  1865,  when  Canadian  lumber  could  be  imported 


ir//y   IVE    TRADE  AND  //Oir   IVE    TRADE, 


37 


into  the  United  States  free  of  duty,  a  very  considerable 
business  existed,  all  the  way  from  Eastport,  Maine,  to 
New  York,  on  the  Atlantic  coast,  and  also  at  certiin 
points  on  the  lakes,  in  importing  Canadian  lumber  in 
the  i'ougli,  working  it  up  by  machinery  into  the  rea- 
dy constituents  of  houses  —  boards,  flooring,  shingles, 
doors,  paling,  sash,  blinds,  etc. — and  shipping  it  to  the 
West    Indies,   South  America,   Cape   of  Good    Hope, 
Australia,  and  other  countries,  where  labor  was  scarce 
and  machinery  almost  wholly  wanting.      Of  this  busi- 
ness the  United  States,  previous  to  and  during  the  first 
two  years  of  the  war,  had  almost  entire  control ;  and  it 
is  doubtful  if  even  so  much  as  one  vessel  up  to  that 
time  left  the  Dominion  waters  for  a  foreign  port  loaded 
with  any  such  manufactures.      The  great   increase  of 
prices   and  wages   during   the  war,  coupled   with   the 
presence  of  Confederate  cruisers  upon  the  high  seas,  as 
might  have  been  expected,  materially  affected  the  ex- 
tent of  this  business  ;  but  immediately  on  the  termina^ 
tion  of  the  war  the  export  increased  and  gave  evidence 
of  complete  revival.     But  when  the  reciprocity  treaty 
was  repealed  in  1866,  and  Canadian  lumber  was,  in  con- 
sequence of  the  duties  on   its  import  in  the   United 
States,  made  twenty  per  cent,  more  expensive  to  manu- 
facture on  this  side  of  the  boundary  line  between  the 
two  countries  than  it  was  to  manufacture  on  the  other 
side  of  the  same  line,  the  increase  was  checked  and  the 
revival  did  not  take  place.     American  manufacturers 


(■■P'P'IPP'PPP^I'P'^'^"^ 


■fPnaMMPWi 


fV/fV   WE   TIRADE  AND  HOW  WE   TRADE. 


moved  "their  capital  and  machinery  across  the  borders, 
or  enti'-ely  abandoned  the  export  business  ;  wiiile  Cana- 
dian manufacturers  made  haste,  to  take  up  the  busi- 
ness where  the  Americans  dropped  it,  or  rather,  by  the 
action  of  their  own  government,  were  forced  out  of  it. 
So. that,  whereas  in  1863  few  vessels  loaded  with  manu- 
factured lumber  sailed  out  of  the  ports  of  the  British 
Provinces  for  foreign  markets,  the  number  of  such  ves- 
sels so  loaded  and  sailing  in  1871  was  reported  in  ex- 
cess of  seventy  ;  the  shipments  of  lumber,  in  great  part 
manufactured,  from  the  port  of  St.  Johns,  New  Bruns- 
wick, to  the  British  West  Indies,  for  example,  increas- 
in-g  from  $16,000  in  1855  to  $550,000  in  1872;  to  the 
Spanish  West  Indies,  from  $269,000  to  $882,000 ;  and 
to  South  America,  from  $18,000  to  $127,000,  during  the 
same  period.  On  the  other  hand,  the  exports  of  manu- 
factured lumber  from  the  United  States  have  never 
regained  the  proportions  that  they  attained  prior  to  the 
war;  $1,882,000  in  1875,  as  compared  with  $3,158,000 
(gold  valuation)  in  1857,  and  $2,703,000  in  i860.  The 
annual  exportation  of  all  lumber  from  the  United 
States,  from  1865  to  1874,  has  also  remained  almost 
stationary ;  while  the  aiiiount  of  lumber  imported  from 
the  Provinces  into  the  United  States  has  increased, 
notwithstanding  the  duties  and  a  large  augmentation 
of  prices,  to  meet  home  necessities. 


i^miiiiiliiiiii 


?aRRSP?»?®»WWS 


IV/IV    WE    TRADE   AND   I/O  IF    WE    TRADE. 


39 


HOW  THE  UNITED   STATES  TRADES  WITH   CHILI. 

But  the  commercial  relations  between  the  United 
States  and  British  North  American  Provinces  are  by 
no  means  peculiar  or  exceptional.  They  are,  in  fact, 
the  type  of  the  commercial  relations  which  the  United 
States  has  established  with  most  or  all  other  coun- 
tries, and  it  matters  little  at  what  point  one  begins  to 
investigate  it.  For  he  will  find  everywhere  evidence, 
amounting  to  demonstration,  that  the  development  of 
the  industry  and  commerce  of  the  United  States  haj 
been  most  disastrously  checked,  and  the  present  state 
of  business  depression  in  a  great  degree  occasioned,  by 
the  persistent  refusal  to  recognize,  in  our  commercial 
and  fiscal  legislation,  the  simplest  principles  of  political 
economy.  In  further  proof  of  this,  attention  's  next 
asked  to  the  character  of  our  commercial  relations  with 
Chili — one  of  the  most  prosperous  of  the  South  Ameri- 
can States.  The  manufactures  of  Chili  being  few  and 
rudimentary  in  the  extreme,  its  people  import  from 
other  countries  nearly  all  that  they  require  of  cottons, 
woolens,  hardware,  agricultural  implements,  and  other 
machinery,  paints,  oils,  gunpowder,  earthen  and  glass 
ware,  boots  and  shoes,  straw  goods,  etc.,  etc.  The  larg- 
est single  item  of  their  imports  is  cotton  cloth,  of  which 
Chili  imported  for  domestic  consumption  during  the 
year  1874 — a  year  of  great  commercial  depression — from 
Great  Britain  more  than  55,000,000  yards  ;  and  from  the 


m 


MM 


40 


lV//y   WE    TRADE  AND  HOW   WE    TRADE. 


United  States  during  the  same  year,  a  quantity  not  in 
excess  of  5,000,000  yards  ;  or,  in  other  words,  this  little 
State,  one  of  the  smallest  among  the  nations,  with  a 
population  of  about  2,000,000,  imported  more  cotton 
cloth,  to  supply  her  wants,  from  Great  Britain  in  1874, 
than  the  United  States  exported  that  same  year  in  the 
aggregate  to  all  foreign  countries  combined.  During 
the  year  1874  many  of  the  cotton-mills  of  the  United 
States  stood  idle  or  worked  on  reduced  time,  for  the 
reason  that  no  market  could  be  founil  fv  /  ♦^heir  pro- 
ducts ;  but,  had  the  United  States  been  able  to  supply 
Chili  during  that  year  with  55,000,000  yards  of  cotton 
cloth,  the  demand  would  have  sufficed  to  have  kept 
about  150,000  spindles  (No.  14  ya^ii),  or  about  one- 
quarter  of  the  cotton-mills  in  the  State  of  New  York, 
in  active  operation  for  every  working  day  in  the  year ; 
and  the  withdrawal  of  the  products  of  these  mills 
from  competition  in  the  domestic  market  would  prob- 
ably have  enabled  many  other  mills  in  the  con  '.  ry  to 
have  avoided  suspension,  to  the  great  benefit  nl  \.,a-  r 
and  to  the  dimijiution  of  destitution  and  idleness. 

Now,  what  was  the  reason  that  the  United  States 
were  unable  to  sell  but  5,000,000  of  yards  of  cotton 
c  Dth  in  1874  to  Chili,  while  Great  Britain  could  sell  in 
the  same  year  55,000,000?  Not  that  the  people  of 
Chili  preferred  English  cloth  to  American,  for  the 
general  testimony  is  to  the  effect  that  the  American 
cloth  is  better.     Not  because  the  people  of  Chili  wee 


■■■ 


JVI/y   WE    TRADE  AND  HOW   WE    TRADE. 


41 


unwilling  to  trade  with  the  people  of  the  United  States, 
for  the  relations  of  the  two  countries  have  always  been 
in  the  highest  degree  friendly ;  and  then,  again,  senti- 
ment has  very  little  to  do  with  trade  nowadays.  Trade 
knows  little  and  cares  less  of  the  places  and  nations 
where  goods  are  made,  and  nations,  alike  with  individ- 
uals, everywhere  buy  and  sell  as  they  think  they  can 
best  subserve  their  own  pocket  interests.  "  Exactly 
so,"  will  doubtless  be  the  remark  of  some  readers  at  this 
point.  "  England  supplies  Chili  with  cotton  cloth  rather 
than  the  Unit.ed  States,  because  of  the  advantage  which 
comca  to  her  through  the  possession  of  cheaper,  or,  as 
many  are  pleased  to  tenn  it,  pauper  labor."  But  hold  ! 
England  indeed  has  an  advantage,  but  the  advantage 
does  not  come  in  here.  All  recent  investigations  a».d 
practi<:al  experience  have  shown  that  in  respect  to  the 
coarser  cotton  fabrics  which  constitute  the  bulk  of  the 
world's  consumption,  the  United  States  can  now  manu- 
facture full  as  cheap  and  probably  a  little  cheaper  than 
Great  Britain.  There  are  cotton-mills  now  running  in 
New  England  whose  products  are,  and  for  the  past  year 
have  been,  largely  exported  and  sold,  after  paying 
freights  and  commissions,  at  a  profit  in  London,  Liv- 
erpool, and  Manchester.  Cotton  goods  made  at  Fall- 
River,  Massachusetts,  and  shipped  to  England,  have 
been  reshipped  by  Manchester  firms  to  foreign  markets 
at  a  profit.  According  to  the  recent  investigations  of 
Mr.  Atkinson  (see  communication  to  the  New  York 


42 


pyj/y   WE    TRADE  AND  HOW   WE   TRADE. 


Herald,  April  24th,  i<S77),  the  cotton-spinner  in  New 
England  has,  and  for  several  years  past  has  had,  an  ad- 
vantage in  the  price  of  his  cotton  over  the  cotton-spin- 
ner of  Manchester,  England,  of  three-fourths  of  a  cent  a 
pound  on  the  cost  of  his  cotton,  which  would  admit  of 
the  New  England  manufacturer  paying  thirty-three  per 
cent,  higher  wages  than  his  English  competitor,  "  and 
yet  make  the  thirty-inch  (cotton)  drill  at  the  same  cost. 
But  the  American  cotton  manufacturer  does  not  pay 
thirty-three  per  cent,  higher  wages  than  are  paid  for 
similar  labor  in  Great  Britain.  On  the  contrary,  ac- 
cording to  Mr.  Atkinson,  all  the  evidence  obtainable  is 
to  the  effect  that  *'  the  cost  of  labor  per  pound  or  yard 
of  cloth  is  now  as  high  in  Great  Britain  as  it  is  in  New 
England,  and  according  to  some  of  the  evidence,  the 
cost  of  manufacturing  is  to-day  less  in  New  England 
than  in  Great  Britain."  "  This  difference  the  English 
manufacturer  has  of  late  only  surmounted  "  (we  con- 
tinue to  quote  from  Mr.  Atkinson)  "  by  adulterating  his 
goods  witii  starch,  clay,  barytes,  and  other  substances 
— a  practice  which  is  now  reacting,  and  which,  in  the 
long  run,  will  not  succeed."*  In  the  cost  of  producing 
cotton  goods  of  the  same  quality  suitable  for  the  Chilian 


*  In  a  recent  lecture  given  before  the  Society  of  Arts  in  London 
by  Mr.  William  Thompson,  F.C.S.,  upon  the  "  Sizing  of  Cotton  Cloth," 
a  list  of  the  materials  used  for  adulteration  was  given  in  detail  and  the 
methods  described.  In  witness  of  the  importance  of  the  subject  the  lec- 
turer said :  "  As  a  general  rule  the  whole  margin  of  the  whole  [English] 
manufacturer's  profit  lies  within  the  size  used." 


PPiHIiPIIPii^^^ 


mffmf^^fimfmfm^fim 


WHY   WE    TRADE  AND  HOW   WE    TRADE. 


43 


market   the   advantage,  therefore,  is  clearly  with   the 
American  rather  than  the  British  manufacturer;  and, 
other  things  being  equal,  the  American  ought  to  have 
the  trade.     But  other  things  are  not  equal ;  and  in  one 
particular  especially  the  English  manufacturer  enjoys 
an  advantage  over  the  American,  and  by  the  American's 
own  act  and  volition,  which  in  the  race  for  competition 
leaves  the  American  nowhere.     The  Englishman  recog- 
nizes the  truth,  and  acts  upon  the  basis,  that  all  trade 
is  barter,  product  being  given  for  product,  service  for 
service;  that  to  sell  one  must  buy;  and  in  supplying 
Chili  with  cotton  cloth  he  takes  his  pay  for  his  cloth  in 
what  Chili  has  got  to  pay  with.     The  American  manu- 
facturer, on  the  other  hand,  refuses,  or  by  the  act  of  his 
own  govern. mert  is  not  allowed,  to  takf^  his  pay  directly 
in  what  Chili  has  got  to  sell ;  and  as  a  consequence  has 
not,  and  as  long  as  he  continues  to  pursue  the  same 
course   never  will   have,  any  considerable  trade  with 
Chili. 

Thus,  the  commodity  which  Chili  has  mainly  lo  sell 
is  copper  ore ;  out  of  a  total  export  in  1872  of  cbout 
$30,000,000,  more  than  one-half  in  value  ($17,500,000) 
consisting  of  ores  of  copper,  copper  regulus,  and  un- 
wrought  copper.  Another  important  article  of  Chilian 
export  is  wool.  Now  the  method  of  trade  between 
Great  Britain  and  Chili  is  as  follows:  British  ships, 
loaded  with  cotton  goods  (average  55,000,000  yards  per 
annum),  hardware,  paints,  machinery,  paper,  etc.,  sail 


■Pi 


•pppn^H^fM 


44         m/y   WE   TRADE  AND  HOW  WE    TRADE. 

for  Valparaiso,  earning  freights.    Arriving  in  Chili,  the 
cargo  unloaded  is  replaced  with  another  cargo  of  copper 
ores  or  ivool,  and  the  ships  return  to  England,  earning 
other  freights.     Profitable  employment  is  thus  given  to 
many  British  ships,  and  an  explanation  in  great  part  af- 
forded of  the  continued  supremacy  of  the  British  com- 
mercial marine,  which  strengthens  and  increases  just  in 
proportion  as  trade  increases.     Arriving  in  England  the 
copper  ores  are  sold  to  the  copper-smelters  at  Swansea, 
in  the  southwest  of  England ;  who,  in  converting  them 
?nto  mercantile  forms,  employ  English  labor,  English 
capital,  English  railway  service,  and  consume  large  quan- 
tities of  English  coal.     Smelted  into  ingots,  rolled  into 
sheets,  or  converted   into  yellow-metai,   or  brass,  the 
Chilian  copper  is  finally  sold  to  whoever  in  the  world 
wants  to  buy— and  all  the  world  always  does  want  to 
buy  copper  under  some  conditions*— and  out  of  the 
proceeds  of  the  sale  the  Swansea  smelter  pays  himself, 
pays  the  cotton-spinner,  the  shipowner,  the  coal-miner, 
the   common    carrier,   and   all   others   concerned ;    the 
movement,  as  a  whole,  being  in  the  nature  of  a  great 
circle   of  transactions,   in   every  one    of   which  some 
profit  accrues  to  English  capital  and  some  opportunity 

*  Consider  the  conditions  tinder  which  that  part  of  the  world  known 
as  the  United  States  buys.  English  yellow-metal  is  admitted  free  of  duty 
if  used  on  American  vessels  not  engaged  in  the  coastwise  trade;  while 
the  copper  ore  and  copper  out  of  which  this  very  yellow-metal  is  made 
are  excluded  from  our  ports  by  the  excessive  duty  imposed  on  their  im- 
portation. 


^i^fe^^ 


im^mmim^mimimt^ 


WHY   WE    TRADE  AND  HOW   WE   TRADE. 


45 


for  employment  is  afforded  to  English  labor.  But  in 
this  great  and  special  circle  of  production  and  exchange 
American  capital  and  American  labor  find  no  place. 
Other  interests  have  in  effect  said  to  Congress,  a  dollar 
made  in  copper-mining  in  the  United  States  is  worth 
more  than  a  dollar  made  in  copper-smelting  in  the 
United  States,  although  the  copper-smelting  forms  the 
link  in  a  chain  of  transactions,  which,  uninterrupted, 
will  allow  of  a  great  and  continuous  commercial  current, 
and  which  iii  turn  will  give  employment  to  ten  dollars 
of  capital  and  ten  laborers,  where  the  interests  of  cop- 
per-mining will  employ  of  each  but  one.  And  Congress 
has  thus  far  listened  to  the  demands  of  the  small  and 
crushed  the  interests  of  the  great, '^  and  since  1869  has 
imposed  rates  of  duty  on  copper  and  copper  ore,  which 
really  were  not  needed  to  sustain  any  American  inter- 
ests, and  which  have  made  the  importation  of  either  of 
these  commodities  into  the  United  States  practically 
impossible.  Previous  to  1869  this  was  not  so.  Then, 
under  a  duty  of  five  per  cent,  ad  valorem,  copper  ores, 
obtained  in  exchange  for  various  products  of  American 
labor  in  Chili,  on  the  coast  of  Africa,  and  in  the  West 
Indies,  were  imported  in  considerable  quantities,  and 
large  works  existed  in  Boston  and  New  York  harbors 
and  in  Baltimore  for  smelting  them  in  connection  with 

*  The  value  of  the  opper  product  of  the  United  States  for  1870  was 
returned  at  $5,201,312  ;  of  cotton  goods,  $250,347,000 ;  of  woolen  and 
worsteds,  $177,495,000;  of  boots,  shoes,  and  leather,  $287,065,000. 


■J-  ■    ; 

■i '  • , 


46 


lV//y   WE   TRADE  AND  HOW   WE   TRADE. 


American  ores  that  mixed  advantageously.  But  no 
smoke  has  come  out  of  the  chimneys  of  any  of  these 
works  since  the*  imposition  of  the  existing  duty,  and  so 
long  as  it  is  continv  '^.d  none  ever  will. 

How  great  the  extent  of  this  special  circle  of  indus- 
try and  commerce  from  which  the  United  States  by 
its  legislation  has  excluded  its  labor  and  capital  is  strik- 
ingly illustrated  by  the  circumstance  that,  for  the  year 
1875,  the  value  of  the  copper,  manufactured  and  unman- 
ufactured, which  Great  Britain  exported,  was  greater 
than  the  value  of  all  the  wheat  in  the  form  of  flotir  ex- 
ported from  the  United  States  during  the  same  period/^ 
And  wheat  flour,  it  is  to  be  borne  in  mind,  is  one  of 
the  commodities  for  the  exportation  of  which  it  is  uni- 
versally admitted  the  United  States  has  advantages 
equal  to  if  not  greater  than  those  of  any  other  portion 
of  the  globe ;  while  the  advantages  enjoyed  by  Great 
Britain  for  supplying  the  world  with  copper  are  natur- 
ally no  greater  than  pertain  to  the  United  States,  and 
in  some  respects  are  unquestionably  inferior. 

In  1876,  there  being  an  evident  opening  for  the  sale  of 
American  farm  products,  cotton  fabrics,  machinery,  hard- 

*  For  the  year  1875  the  United  States  exported  5,147,140  pounds  of 
unmanufactured  copper,  of  the  value  of  $1,046,227  ;  and  of  l>rass  and 
manufactures  of  copper  and  of  brass,  to  the  value  of  $1,125,711  ;  total, 
$2,271,938.  During  the  same  year  Great  Britain  exported  of  copper, 
wrought  and  unwrought,  and  of  brass  and  yellow-metal,  1,001,940  cwt.. 
having  a  declared  value  of  $24,910,250,  gold.  On  the  other  hand,  the 
value  of  the  wheat  flour  exported  from  the  United  States  for  the  fiscal  year 
1875,  was  returned  at  $23,712,440,  currency. 


PFNY   WE    TRADE  AND  HOW  WE    TRADE.  47 


ware,  etc.,  in  Chili,  a  line  of  steamers  was  started  from 
Boston ;  owned  in  great  part  in  the  United  States,  but 
of  British  build  and  register,  carrying  the  British  flag, 
and  commanded  by  an  English  captain.  After  a  year's 
experience,  the  agents  report  that  they  succeed  toler- 
ably well  as  to  outgoing  cargoes,  but  are  embarrassed 
about  the  return  cargo ;  and  ships  to  be  profitable  must 
earn  freights  both  going  to  and  returning  from  a 
market.  These  Boston  steamers,  to  obtain  a  return 
cargo,  have  therefore  been  obliged  to  take  Liverpool 
freight  and  tranship  it  at  Boston  ;  several  hundred  tons 
of  copper  in  one  instance,  for  example,  having  been  re- 
cently brought  by  one  steamer  to  Boston.  But,  as  this 
cargo  could  not  be  profitably  landed  at  Boston,  paying 
duty,  it  had  immediately  to  be  sen*  to  England.* 

Another  important  article  which  ^hili  has  to  export, 
and  give  in  payment  for  foreign  products,  is  nitrate  of 
soda  (Chilian  saltpetre),  largely  used  in  the  manufacture 
of  gunpowder,  sulphuric  and  nitric  acids,  and  for  fertil- 
izeYs ;   and   our  recent  industrial  and  commercial   ex- 

*  For  the  five  years  preceding  and  including  1876,  our  average  ex- 
ports to  Chili  have  been  $2,280,301  per  annum  ;  while  our  average  im- 
ports from  Chili  have  been  but  $800,566  per  annum.  The  whole  foreign 
commerce  of  Chili  for  the  year  1874  amounted  to  the  large  total  of 
$72,958,379.  Of  this  commerce  the  United  States  enjoyed  less  than  5 
per  cent.,  ranking  after  England,  France,  Germany,  Peru,  and  Bolivia.  For 
the  fiscal  year  ending  June  30th,  1876,  our  exports  to  Chili  were  as  fol- 
lows:  Manufactures  of  cotton,  $490,330;  refined  sugar,  $435,523  ;  manu- 
factures of  iron  and  steel,  $269,067  ;  manufactures  of  wood,  $181,422; 
railroad  cars,  $174,975  ;  provisions,  $131,576  ;  mineral  and  other  oils, 
$112,283  ;  agricultural  implements,  $88,075  J  aU  other  articles,  $316,259. 


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48 


lV//y   IVE   TRADE  AND  HOW  WE   TRADE. 


perience   with   this   raw   material   for   manufiicture   as  . 
strikingly  illustrates  the  beneficial  effects  of  exennption 
from  governmental  interference,  as  our  recent  experi- 
ence with  that  other  raw  material,  copper,  illustrates  the 
disastrous  effects  of  such  interference.     Prior  to  1 870 
nitrate  of  soda  was  subjected  on  importation  to  a  duty 
of  one  cent  per  pound  ;  since  1870  it  has  been  admitted 
free  of  duty.     Note  the  effect.     The  imports,  which  in 
1869-70   were   28,867,000   pounds,   have    increased    to 
51,887,000  in  1876.    Who  and  what  has  been  benefited? 
First,  the  carrying  trade  between  the  United  States  and 
Chili.      Second,   the   general    industry   of    the    United 
States,  for  the  labor  embodied  by  the  Chilians  in  dig- 
ging and  shipping  the  saltpetre,  has  been  compensated 
by  an  equivalent  amount  of  labor  embodied  in  some 
products   (manufactured)  of  the  United  States,  nearly 
two  pounds  of  nitrate  of  soda  being  used  for  the  manu- 
facture of  gunpowder,  nitric  and  sulphuric  acids,  and 
fertilizers,  where  one  was  used  but  a  few  years  previous. 
Third,  the  powder,  acid,  and  fertilizer  makers,  and  the 
bleachers  and  dyers  of  the  United  States,  who,  having 
a  part  of  the  tools  (raw  materials)  of  their  ^,rade  cheap- 
ened, have  evidently  sold  more,  and  been  enabled  to 
sell  cheaper,  and  so  better  contend  against  foreign  com- 
petition in  the  production  and  sale  of  similar  products. 
And  who  and  what  has  experienced  anything  of  detri- 
ment  by  the  remission  of  duties  on  this  Chilian  salt- 
petre ?    The  United  States  lost  an  amount  of  annual 


WHY   WE    TRADE  AND  HOW  WE    TRADu:. 


49 


revenue  (1869-70)  of  $288,000,  which  was  probably  not 
one-twentieth  of  what  the  country  gained  indirectly, 
reckoned  in  money. 

HOW    WE    TRADE    WITH    THE    ARGENTINE    REPUBLIC. 

Leaving  now  Chili,  and  crossing  the  continent  to  the 
east,  we  have  the  Argentine  Republic,  another  South 
American  State  resembling  Chili.  Its  importations 
for  the  year  1874  were  as  follows:  From  England, 
$21,405,000;  from  France,  $19,836,000;  from  Belgium, 
$16777,000;  and  from  the  United  States,  $3,945,000, 
with  exports  to  the  United  States  of  $3,747,000.  An 
analysis  of  this  insignificant  trade  between  the  United 
States  and  the  Argentine  Republic  shows  that  it  con- 
sisted, during  the  year  specified,  mainly  of  lumber,  with 
some  kerosene,  tobacco,  railway  supplies,  alcohol  and 
whisky,  furniture,  machinery,  and  a  few  other  articles, 
exported  from  the  United  States,  which  were  paid  for 
mainly  (to  the  extent  of  about  two-thirds)  by  an  import 
from  the  Argentine  Republic  of  dry  hides,  together  with 
a  little  wool;  and  small  as  was  this  trade  in  1874,  the 
latest  consular  advices  report  it  as  diminishing  and  not 
increasing.  During  this  same  year  the  export  of  cotton 
goods  from  Great  Britain  to  the  Argentine  Republic 
was  in  excess  of  40,000,000  of  yards;  while  for  the  year 
1875-76,  the  export  from  the  United  States  of  these 
same  fabrics  to  this  same  country  was  practically  noth- 
ing— 155,000  yards  being  officially  reported.  Again,  o\ 
3 


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50 


py//y   IVE   TRADE  AND  HOW   WE   TRADE. 


more  than  a  million  of  dollars'  worth  of  boots  and  shoes 
imported  into  the  Argentine  Republic  in  1 874,  only- 
ten  thousand  dollars  are  reported  as  furnished  by  the 
United  States. 

The  explanation  of  these  curious  commercial  pheno- 
mena is  not,  however,  at  all  difficult.  The  principal 
commodity  of  domestic  production  which  the  Argentine 
States  have  got  to  give  in  exchange  (or  pay  with)  for 
the  commodities  of  foreign  production  which  it  desires 
to  have,  is  Mestiza  wool  ;  which,  in  connection  with 
sheepskms  and  tallow,  comprises  about  two-thirds  in 
value  of  the  entire  exports  of  the  country.  The  United 
States  could  use  Mestiza  wool  in  large  lantities,  and 
pay  for  it  with  cotton  goods  and  othc.  ..ianufactures, 
if  our  manufacturers  were  allowed  to  buy  it.  Put  this 
they  are  not  allowed  to  do  ;  for  the  duties  on  the  im- 
port of  this  wool  are  all  but  prohibitory,  and  under  such 
a  condition  of  things  there  can  be  but  little  trade. 

It  is  useless  to  expect  to  ship  goods  to  Buenos  Ayres 
to  the  growers  of  Mestiza  wool  and  ask  money  in  ex- 
change ;  for  they  cannot  pay  money,  even  if  the  prices 
of  our  merchandise  are  considerably  lower  than  the 
prices  of  corresponding  English  products,  for  they  have 
not  got  it.  There  is  no  coin  of  any  kind  in  circulation 
in  the  Argentine  States,  not  even  for  small  change,  and 
the  paper  money  used  i?  of  the  most  depreciated  char- 
acter. Hence,  so  far  as  we  shut  Mestiza  wool  out,  we 
shut  American  cotton  fabrics   and  other  merchandise 


WI/Y  WE    TIRADE  AND  I/O  IV  IV E   TRADE. 


51 


in.     England,  on  the  other  hand,  imposing  no  restric- 
tions on  the  trade  with  wool,  the  wool  product  of  the 
Argentine  States  finds  its  way  mostly  to  England,  and 
is  paid  for,  primarily,  with  English  goods  ;  and  this  in 
the  main  also  is  the  reason  why  England,  in  1874,  sold 
to  these  States  merchandise  to  the  value  of  seven  dol- 
lars, where  the  United  States  sold  one.     If  it  now  be 
rejoined  that,  in  proportion  as  we  exclude  and  use  less 
of  Mestiza   and  other  foreign  wools,  the  greater  the 
amount  of  home-grown  wool  we  will  manufacture,  and 
the  larger  the  quantity  of  home  manufacture  we  will 
sell  to  the  I^  nerican  wool-grower  for  consumption,  the 
answer  is,  that  any  such  rejoinder  will  not  be  in  accord- 
ance with  experience.     For  a  reference  to  any  file  of 
American  "price  currents,"  running  back  to   1840,  will 
prove,  beyond  the  possibility  of  dispute,  that  the  Ameri- 
can wool-grower  has  always  obtained  the  highest  prices, 
and  has  raised  proportionally  the  largest  quantity,  when 
foreign  wool  has  been  free  of  duty;  while  since  the  year 
1868-9,  when  the  duties  on  the  importation  of  foreign 
wools  were   made  practically  prohibitory,  he   has   ob- 
tained lower  prices  for  his  product  than  almost  ever 
before    in   our    history,  and   has  bought   the   smallest 
quantities  of  other  domestic  merchandise.* 

The  same  obstacles  in  the  way  of  an  extended  com- 

*  The- business  of  Europe  with  the  River  "Plate"  requires  the  dis- 
patch of  one  large  steamer  on  an  average  every  day  of  the  year.  But, 
as  the  bulk  of  the  exports  from  the  countries  bordering  on  this  great  river 


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52  fVJIY  WE   TRADE  AND  HOW   WE   TRADE. 

merce  between  the  United  States  and  the  Argentine 
States  also  exist  and  operate  on  even  a  larger  scale  in 
respect  to  the  t'-ade  between  the  United  States  and 
Australia  and  I>Jew  Zealand.  The  rapid  development 
of  these  British  colonies  in  the  South  Pacific  is  one;  of 
the  wonderful  social  and  economic  phenomena  of  the 
latter  half  of  the  nineteenth  c^mtury ;  the  aggregate  of 
their  exports  and  imports  (with  a  population  of  2,278,- 
000)  for  1875  being  $458,399,000,  or  more  than  three- 
eighths  of  the  aggregate  foreign  trade  of  the  United 
States,  with  a  population  of  about  44,000,000,  for  the 
same  year.  During  the  year  1875  these  colonies  im- 
ported, paid  for,  and  consumed  commodities  of  foreign 
production  to  the  extent  of  $236,000,000;  and  of  these 
the  United  States  furnished  so  small  a  proportion  that 
in  the  official  and  general  summary  of  our  exports  (see 
Report  of  the  Bureau  of  Statistics,  1875-76,  p.  no)  our 
Australian  export  trade  is  not  considered  of  sufficient 
importance  to  have  a  special  enumeration,  but  comes  in 

are  almost  exclusively  wool,  sheepskins,  tallow,  and  hides  ;  and  as  the  duties 
imposed  on  the  importation  into  the  United  States  of  the  first  three  of 
these  commodities  are  practically  prohibitory,  steamships  carrying  Ameri- 
can products  direct  to  these  countries  of  South  America,  if  once  established 
as  is  proposed  by  subsidies,  would,  as  long  as  our  present  tariff  remains  in 
force,  have  to  return  empty,  and  so  run  unprofitably.  Our  own  legisla.tion, 
therefore,  makes  Europe  the  market  to  the  countries  of  the  River  Plate 
for  selling ;  and  the  market  for  selling  is,  under  most  circumstances,  the 
market  for  buying.  Again,  the  bulk  of  onr  present  exports  to  the  River 
Plate  is  lumber,  which  cannot  be  profitably  carried,  in  steam^ips ;  so 
that  under  existing  circumstances  the  United  States  would  seem  to  be 
nrecluded  from  having  regular  cargoes  for  steamships  either  way. 


^iA^^^^aJaJ^.1    jK^i^^i^^iMk-^^-fi^^''^^-'^^'^^'^^-'^ 


liiMiiiiiiiiiiiiiii^ttM 


WHY  WE   TRADE  AND  HOW  WE   TRADE. 


53 


under  the  general  head  "  Domestic  Exports  to  [all]  the 
British  East  Indies,  Australia  [and  New  Zealand]  for 
1875,  fo»978,ooo."  And  yet  an  examination  of  the  de- 
tails of  tnis  small  export  shows  that  the  Australiais 
found  it  for  their  interest  to  buy  a  little  of  almost  all 
the  manufactured  products  which  it  is  particularly  for 
the  interest  of  the  labor  of  the  United  States  should  be 
sold  abroa^A ;  and  this,  too,  when  the  Australian  mar- 
kets were  undoubtedly  fully  stocked  with  similar  ar- 
ticles, the  products  of  other  foreign  countries.  If  it  be 
asked  why  these  British  colonies  did  not  buy  more  of 
us,  the  answer  is  simple,  and  in  the  main  is  the  same  as 
must  be  given  to  the  question,  Why  do  not  the  Chilians 
and  the  people  of  the  Argentine  States  of  South 
America  buy  more?  It  is  because  the  people  of  the 
United  States  will  not  take  their  pay  for  what  they, 
want  to  sell  in  what  the  Australians  and  New-Zealand- 
ers  have  got  to  pay  with,  mainly,  wool  and  copper ; 
and  the  enemies  to  the  development  of  American  in- 
dustry are  not,  as  it  is  continually  and  most  impudently 
asserted,  those  who  desire  freer  trade  as  a  part  of  the 
fiscal  policy  of  the  United  Statts,  but  those  who  de- 
mand that  the  existing  obstacles  to  trade  which  have 
been  pointed  out,  and  the  injurious  effects  of  which  are 
so  obvious,  shall  be  continued. 


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WHY   WE    TRADE  AND  HOW  WE    TRADE. 


HOW  THE  REMOVAL  OF  RESTRICTIONS   ON   EXCHANGES 

INCREASES  BUSINESS. 

In  broad  and  striking  contrast  with  the  above  illus- 
trations of  the  effect  of  restrictive  legislation  in  restrict- 
ing trade  and  commerce,  attention  is  next  asked  to 
the  following  equally  striking  illustration  of  the  effect 
of  the  removal  of  legislative  restrictions  in  increasing 
trade  and  commerce,  the  same  being  derived  from  the 
most  recent  data,  and  forming  part  of  a  paper,  "  On 
the  Tariff,"  presented  by  Mr.  J.  S.  Moore  to  the  Ameri- 
can Social  Association,  Saratoga  meeting,  1877: 

"  In  1870,  our  trade  with  Venezuela  was  as  follows : 
We  imported  from  that  republic  products  valued  at 
$2,037,312,  and  we  exported  products  valued  at  $1,307,- 
833.  In  fact,  our  whole  import  and  export  trade  v/ith 
Venezuela  amounted  in  1870  to  $3,345,145.  Now,  it 
must  be  borne  in  mind  that  Venezuela  has  but  two 
great  articles  of  export — namely,  coffee  and  hides — 
both  of  which,  up  to  1870-72,  paid  a  duty  in  the  United 
States.  But  during  1870  we  made  coffee  free,  and  in 
1872  we  made  hides  free  in  the  United  States,  and  the 
increase  of  our  trade  with  that  republic,  in  imports  and 
exports,  shows  a  wonderful  result. 

"  In  1876,  we  imported  from  Venezuela  products 
valued  at  $5,875,715,  or  nearly  three  times  more  than  in 
1870; ,  and  we  exported  to  that  republic  in  1876  goods 
valued  at  $3,424,278,  as  against  $1,307,833,  an  increase 


f4w;'>^,&-.w^ 


illiiiiiiittiiiii^^ 


Wl^y   WE    TRADE  AND  HOW   WE   TRADE.  re 

of  over  260  per  centum  as  compared  with  1870.  In 
fact,  to  show  this  wonderful  increase  of  trade  at  a 
glance,  I  will  repeat  that  our  whole  trade,  imports  and 
exports,  in  1870  with  Venezuela  was  $3,345,145,  and  in 
1876  it  was  $9,299,993.  But  I  am  tempted  to  ask  two 
questions  :  First,  what  was  the  nature  of  the  increase  of 
our  imports  ?  and  second,  what  was  the  nature  of  the 
increase  of  our  exports?  Well,  in  1870,  when  coffee 
and  hides  paid  a  duty  in  the  United  States,  we  import- 
ed $1,269,478  worth  of  coffee  and  $440,449  worth  of 
hides  ;  while  in  1876,  when  coffee  and  hides  were  free, 
we  imported  $4,581,745  worth  of  coffee  and  $668,531 
worth  of  hides.  Thus,  these  two  articles  show  an  in- 
crease of  over  320  per  centum.  But  the  next  answer, 
the  nature  of  the  increase  of  our  exports  to  Venezuela, 
is  as  interestinf^  as  indeed  it  will  prove  conclusive. 

"  Here  is  a  table  which  gives  the  value  of  articles  ex- 
ported to  Venezuela  in  1870  and  1876  respectively: 

Years.  Years. 

Articles.  1870.  1876. 

Bee'r $56  $12,299 

BreadstUiTs 291,788  788,696 

Candles 7.265  28,665 

Carriages 5.434  45.544 

Brooms  and  brushes 1,824  6,213 

Clocks 516  3,784 

Cordage 20,439  .65,840 

Cotton  goods 11,958  126,950 

Drugs  and  chemicals. 23,501  1 10,825 

Earthenware 95  2,724 

Fancy  articles 25  5.37° 


11 


^^^B?  j^f^^^^        v^^ 


56  ff^I/y  WE    TRADE  AND  HOW   WE    TRADE. 

Preserved  fruits , $483  $7,157 

Iron,  steel,  cutlery,  and  guns 141,043  246,281 

L^'^P^ • 1.035  7,565 

Leather  goods 2,075  7,630 

Marble  and  stone 800  I9,570 

Pianos 320  3,236 

Mineral  oil 21,993  52,008 

Paper  and  stationery 3,688  37,950 

Provisions 119.393         '      463,280 

Sewing-machines 5,993  58,208 

Soap.... : 3,844  16,924 

"  Such  is  the  h'st  of  the  chief  articles  of  export. 

"  Now,  can  anything  prove  more  conclusively  than 
the  foregoing  that  a  free  exchange  of  commodities  is 
conducive  to  the  benefit  of  both  countries  engaged  in 
the  trade  ? 

'*  But  a  still  more  astounding  proof  can  be  found  in 
the  effect  that  this  freer  exchange  of  commodities  had 
on  the  shipping  business.  In  1870,  when  we  had  a 
duty  on  coffee  and  hides,  the  American  shipping  en- 
gaged in  the  trade  with  Venezuela  was  as  follows :  The 
total  American  ships  engaged  in  the  trade  that  entered 
and  cleared  from  and  to  Venezuela  amounted  to  15 
vessels,  of  2,571  tons  capacity,  employing  109  hands. 
In  1876,  the  American  ships  engaged  in  the  same  trade 
amounted  to  134  vessels  as  against  15  in  1870,  with  a 
capacity  of  43,459  tons  as  against  2,571  tons  in  1870, 
and  employing  1,2155  American  hands  as  against  109 
hands  in  1870. 

"Another  and  still  more   conclusive  demonstration 
that  the  freeing  of  the  raw  material  of  an  industry  from 


i^mMMmtki^^m 


mm^mmmmiL 


■■HHHHII 


WNV  WL    TRADE  AND  HOW   WE   TRADE.  57 

taxation  immediately  leads  to  a  greater  exportation  of 
the  products  of  such  industry,  can  be  found  in  the  fol- 
lowing facts:  I  said  that  in  1872  we  made  hides  free; 
now  let  me  show  the  effect  the  freeing  of  raw  hides  had 
on  our  export  of  tanned  leather. 

"  In  1872,  the  last  year  when  a  duty  was  levied  on 
raw  hides,  our  « 

Export  of  tanned  leather  was  valued  at $2,864,800 

In  1873,  the  first  year  after  hides  were  free,  the  export 

value  of  leather  rose  to 4,365,174 

Two  years  later,  in  1875,  it  rose  to 7,064,482 

And  in  1876  the  amount  exported  was 7,940,010 

"  In  fact,  while  our  exports  of  tanned  leather  under 
the  hide  duty  in  1872  was  only  $2,864,000,  it  rose  in 
1876  under  free  hides  to  nearly  $8,000,000. 

**  I  candidly  ask  any  unbiased  mind  who  has  given 
economic  questions  the  least  attention,  whether  these 
demonstrations  are  not  sufficient  to  prove  that  our  ex- 
isting tariff  constitutes  one  of  thfv  greatest  obstacles  to 
a  return  to  national  prosperity?  If  by  allowing  free  cof- 
fee and  hides  to  come  from  Venezuela  we  have  increased 
our  exports  threefold  to  that  republic,  how  much  more 
will  we  increase  our  exports  to  i\ustralia  and  Chili,  if  we 
allow  the  wool  and  copper  of  those  countries  to  come  in 
free,  or  to  India,  if  we  make  linseed,  hemp,  and  saltpetre 
free  ;  and  if,  by  freeing  raw  hides  of  a  duty,  we  increased 
our  exports  of  tanned  leather  threefold,  how  much  more 
will  we  increase  the  exports  of  woolens  and  partially 
3* 


H 


m 


iiiii 


K*;fT 


i'l?'l'»>'i       i'!.i!*tiJ'i  '  " 


/'■i  .'( ;■  J','1  ,l"iU'!  ,>?'  !».9^S1^^^^^IIW^W5WPPW1P"P»1 


58  ^^r    ^i?    TRADE  AND  HOW    WE    TRADE, 

manufactured  lumber  if  we  make  raw  wool  and  wood 
free  ?  " 


As  the  main  object  of  the  above  inquiry  has  been  to 
prove  to  the  people  of  the  United  States  that  there  can 
be  no  large  and  speedy  development  of  the  industry 
and  commerce  of  this  country,  so  long  as  laws  need- 
lessly restricting  free  exchanges  and  reciprocity  in  trade 
exist  upon  our  Statute  Book ;  and,  as  the  truth,  with- 
out anything  in  the  way  of  evasion  or  concealment,  is 
what  the  public  have  a  right  to  demand,  the  writer 
would  here  ask  attention  to  ce/tain  objections  which 
the  advocates  of  the  restrictive  policy — wrongfully 
called  "  protective  "—have  preferred  against  his  state- 
ments and  reasonings.  Thus,  for  example,  a  leading 
protectionist  in  Philadelphia  (shortly  after  the  original 
publication  of  the  substance  of  this  inquiry  in  tht;  North 
American  Review^  September,  1877)  wrote  to  the  New 
York  Nation,  over  the  signature  of  ''Mi  chant,''  as  fol- 
lows : 

"The  function  of  money,  or  its  representatives,  is 
that  of  enabling  indirect  exchanges  to  be  made.  The 
shoemaker  buys  his  cabbages  from  one  man  and  sells 
his  shoes  to  another.  Trade,  in  place  of  being  a  right 
line  between  two  points,  becomes,  so  to  speak,  triangu- 
lar and  polygonal. 

"  This  applies  pre-eminently  to  nations,  which  are  ag- 


ii^  A^i^&^^iiMm^-iM,^yi^.a,.^^.M^ 


™sob5P5sst; 


fVJiy   WE   TRADE  AND  HOW   WE   TRADE, 


59 


gregations  of  individuals,  each  of  whom  acts  according 
to  his  individual  interest,  in  place  of  being,  as  Mr.  Wells 
assumes,  units  actuated  by  a  common  purpose,  and  ask- 
ing, before  they  buy  a  yard  of  calico,  whether  a  half- 
pound  of  copper  regulus  will  be  taken  in  barter.  If  a 
Chilian  merchant  can  buy  a  salable  bale  of  Fall-River 
cloths  cheaper  than  a  similar  bale  from  Manchester,  he 
will  not  reject  it  because  the  Fall-River  mill  cannot  buy 
Chilian  copper.  He  knows  that  the  copper  will  be  sold 
to  Swansea,  and  that  the  resulting  bill  of  exchange  on 
London  will  settle  his  debt  at  Fall-River  as  readily  as 
at  Manchester.  He  knows,  moreover,  that  if  he  patriot- 
ically refuses  to  buy  the  Fall-River  goods,  his  competi- 
tor across  the  street  will  do  so  and  will  undersell  him. 
All  this  is  the  A  B  C  of  trade,  and  no  pathetic  groaning 
over  the  55,ooo,(X)0  yards  of  cottons  supplied  by  Eng- 
land, in  comparison  with  the  5,ooo,ocx)  yards  supplied 
by  the  United  States  in  1874,  will  get  rid  of  it.'* 

To  this  it  may  be  replied,  that  on  a  small  scale  and 
in  individual  instances  it  may  be  true  that  the  Chilian 
merchant,  if  he  could  buy  cotton  cloth  of  American 
product  cheaper  than  English  cloth,  would  not  fail  to 
do  so.  But,  on  a  large  scale,  the  Chilian  merchant 
would  probably  soon  find  out  by  experience,  what  the 
people  of  the  United  States  are  now  learning  to  their 
cost,  that  trade,  in  order  to  increase  and  be  profitable, 
has  got  to  be  reciprocal.  No  matter  how  much  the 
farmer  in  Illinois  may  want  cloth,  and  no  matter  how 


\\ 
-1 


kmA.i.^i»i^,^^..^^.,^.^.^,^..,.^.^..'^^ 


■^^•^'W^^^P^WPUfWpp 


^^^mmmmm>mfmmiilffmimfli 


wmmK 


minpMHi 


60 


JVI/v   WE    TRADE  AND  HOW   WE    TRADE. 


cheap  the  New  York  merchant  may  be  willing  to  sell  to 
him,  if  there  is  an  obstruction  in  the  way  of  the  farmer 
selling  his  wheat,  or  other  product  of  his  labor  he  has 
to  pay  with — whether  that  obstruction  be  in  the  nature 
of  a  bad  road,  an  unbridged  river  or  swamp,  a  range  of 
mountains,  a  legal  enactment  like  a  prohibitory  tariff, 
an  expensive  ship  or  railroad,  or  an  unwillingness  on  the 
part  of  the  cloth-sellers  to  accept  anything  from  the 
farmer  but  coin — the  tendency  will  be  to  reduce  the 
fcvrmer's  consumption  of  cloth ;  and,  if  the  obstruction 
be  made  sufficiently  great,  the  farmer  will  not  buy  any 
of  the  New  York  cloth,  no  matter  how  cheap  it  may  be 
offered  in  New  York.  Now,  in  the  case  of  the  Chilian 
merchant,  the  obstruction  created  has  been  sufficiently 
large  to  prevent  his  buying  any  considerable  quantity 
of  American  cloth.  The  opportunity,  practically,  is 
not  offered  to  him  to  decide  whether  he  will  purchase 
the  American  or  the  English  fabric.  Coarse  American 
cotton  cloth  is  cheaper  and  better  to-day  at  the  place 
of  production — Fall-River  and  Springfield — than  its 
competing  English  product ;  but  when  the  American 
cloth  gets  to  Valparaiso,  the  only  thing  the  exporter 
can  boast  about  it  will  be  its  quality  and  not  its  price. 
But  why  is  this  ?  In  great  part  because  the  American 
protective  system,  besides  enhancing  the  cost  of  ship- 
building, has  destroyed  all  reciprocal  trad-;  between  the 
United  States  and  Chili,  and,  reciprocal  trade  being 
wanting,  there  is  no  opportunity  for  the  profitable  em- 


W//y   WE    TRADE  AND  IIOIV   WE   TRADE. 


6l 


ployment  of  ships  ;  for  ships,  to  be  made  profitable  and 
carry  freights  cheap,  have  got  to  earn  freights  both  ways 
— both  in  going  to  and  returning /r<?w  a  market.  While 
Europe  sends  on  an  average  one  large  steamer  every 
day  in  the  year  to  some  South  American  port,  the 
United  States  has  only  one  line,  running  bi-monthly, 
from  Boston,  established  by  a  private  firm  as  a  matter 
of  experiment ;  and  for  this  line  to  obtain  return  freights 
and  live,  it  is  obliged  to  take  cargoes  of  copper  ore  and 
wool  on  British  account,  and  tranship  them  in  bond  at 
Boston  for  Liverpool,  because  the  tariff  practically  will 
not  allow  of  the  importation  of  these  articles  into  the 
United  States.  To  transport  goods  from  New  York  to 
the  west  coast  of  South  America  {via  the  Isthmus)  is 
reported  to  cost  $44  per  ton,  gold,  and  from  England, 
$15  to  $20.  From  Europe,  by  sail,  to  the  west  coast, 
the  reported  cost  is  from  $3  to  $6 ;  and  from  the  United 
States,  at  from  $10  to  $12,  gold. 

But,  supposing  that  the  American  cotton  manufac- 
turer could  offer  his  cloth  in  Valparaiso  as  cheap  as  the 
English,  then,  says  "  Merchant,"  "the  Chilian  kno^\s 
that  his  copper  will  be  sold  in  Swansea,  and  that  the 
resulting  bill  of  exchange  will  settle  his  debt  at  Fall- 
River  as  readily  as  at  Manchester."  Now,  this  reads 
well  and  seems  plausible;  but  let  us  reason  a  little 
about  it.  If  New  York  sells  $100,000  worth  of  c!oth 
to  Chili  there  is  naturally  a  profit  on  the  transaction. 
If  the  $100,000  received  are  expended  in  Chilian  copper 


/3 


63 


W//r   WE   TRADE  AND  IJOW   WE   TRADE. 


and  wool,  and  these  commodities  are  brought  to  New 
York,  there  is  or  ought  to  be  in  the  course  of  trade  an- 
other profit ;  and  the  American  merchant  gains  both 
ways.  On  the  other  hand,  if  the  Fall-River  cloth  is 
sold  in  Chili,  and  a  bill  of  exchange  is  bought  with  the 
proceeds  of  the  sale,  and  the  same  remitted  to  the 
United  States,  there  will  not  only  be  but  one  profit,  but 
in  addition  a  loss  to  the  American  merchant  on  the  rate 
of  exchange  (which  has  to  come  through  a  third  coun- 
try) ;  for  exchange  in  Chili  on  London  uniformly  rules 
high — as  high  as  from  I2|  to  15  per  cent.  But  from  this 
latter  tax  the  Englishman,  because  his  commerce  with 
Chili  is  reciprocal  and  in  the  nature  of  barter,  is  prac- 
tically exempt.  Technically,  therefore,  while  a  bill  of 
exchange  on  London,  bought  in  Valparaiso,  will  settle 
a  debt  as  readily  at  Fall-River  as  at  Manchester,  an 
American  merchant  who  should  undertake  to  sell  cloth 
in  Chili  and  buy  exchange  with  the  proceeds  for  home 
remittance  and  payment,  would  find  himself  "  nowhere  " 
in  competition  with  his  English  competitor.  "  Mer- 
chant" also  apparently  overlooks  the  circumstance  that 
for  the  United  States  to  sell  goods  to  South  America, 
and  take  pay  for  the  same  at  the  place  of  sale  in  bills 
of  exchange  drawn  upon  England,  is  in  effect  an  ex- 
change of  commodities  with  England.  For  with  what, 
if  not  in  exports  to  this  country,  could  England  pay  its 
bills  of  exchange?  And  does  it  not  follow  that,  to  be 
of  any  use  to  this  country,  a   South  American  trade 


k^//y    WE    TRADE   AND  HOW    WE    TRADE. 


(^z 


working  after  the  manner  supposed  by  **  Merchant " 
necessitates  an  indefinite  increase  of  imports  from 
England  ? 

Again,  as  the  policy  our  "  Merchant  "  advocates  has 
killed  nearly  all  the  direct  trade  of  the  United  States 
with  Chili,  Australia,  and  the  Cape,  it  so  happens  that 
the  raw  wool  of  these  countries  which  we  in  the  course 
of  the  year  need  is  usually  bought  in  England,  and  not 
directly  from  the  countries  that  produce  it.  Hence  it 
follows  that  we  are  obliged  to  pay  to  a  third  country 
another  percentage  or  profit  on  the  products  of  Chili 
and  Australia  which  our  manufacturers  require,  and 
which,  if  we  had  a  direct  trade  or  barter,  could,  of 
course,  be  avoided.  Those  who  have  studied  most 
carefully  the  present  conditions  of  producing  the  cot- 
ton fabrics  ..hich  constitute  the  bulk  of  the  world's 
consumption,  tell  us  that  the  question  as  to  what  na- 
tion shall  supply  the  world  with  such  fabrics  lies  within 
the  limit  of  a  half  a  cent  a  yard  on  the  cloth  woven. 
If  this  be  true,  what  chance  has  the  American  manu- 
facturer in  the  present  one-sided,  imperfect,  profit-de- 
stroyinp  system  of  commercial  transactions  which  the 
United  States  now  maintains  with  foreign  countries? 
There  is  but  one  answer.  The  American  mar  afacturer- 
merchant  is  beaten  in  the  race  before  he  starts. 

Another  frequent  point  of  cavil  which  has  been  made 
to  the  results  of  the  above  inquiry  by  the  advocates 
of  commercial  restriction  and  interference  is,  that  the 


* 


i  I 


IV//V   WE    TRADE  AND  HOW   IVE    TRADE. 

removal  of  restrictions  on  our  international  exchange 
created  by  our  tariff  cannot  be  as  effectual  or  necessary 
for  the  development  of  industry  and  commerce  as  is  rep- 
resented, for  the  reason  that  certain  countries  can  be 
cited,  in  respect  to  the  importation  of  the  staple  pro- 
ducts of  which  the  United  States  imposes  no  legislative 
restrictions  of  any  kind,  but  which  buy  little  of  the 
foreign  products  they  need  from  the  United  States,  al- 
though the  latter  are  among  the  largest  and  most  con- 
stant customers  of  the  former.  Thus,  for  example,  the 
United  States  now  buys  annually  of  Brazil,  produce — 
mainly  coffee  and  India  rubber,  on  the  importation  of 
which  into  the  United  States  no  duties  are  levied — to 
the  amount  of  about  $43,500,000;  while  Brazil  in  turn, 
and  in  the  absence  of  all  discriminating  duties  on  her 
imports,  buys  of  the  products  of  the  United  States  only 
to  the  amount  of  some  $7,500,000,  leaving  a  clear  bal- 
ance annually  agaii.st  the  United  States  of  about 
$36,000,000. 

Again,  the  latest  returns  of  the  Bureau  of  Revenue 
of  Japan  show,  that  while  that  country  sold  to  the 
United  States  durine  the  year  1876,  commodities — teas, 
silk,  etc. — to  a  value  greater  than  to  any  o:her  foreign 
nation  (6,887,307  gold  yens)^  Japan  in  return  bought 
comparatively  little  of  the  United  States  (1,811,083 
gold  yens) ;  much  less  than  it  bought  during  the 
same  period  from  either  Great  Britain,  France,  or 
China ;   although  the    laws  of   Japan   in    respect   to 


^V//y    IV E    TRADE  AND  HOW   WE   TRADE. 


65 


commerce  in  no  ways  discriminate  against  the  United 
States. 

Now  in  answer  to  all  such  specious  criticism  it  may 
be  said,  that  while  it  admits  of  demonstration  that,  un- 
der conditions  which  will  not  permit  of  freedom  of  trade 
with  foreign  nations  or  reciprocity  in  international  ex- 
change, it  is  hopeless  for  the  people  of  the  United 
States  to  expect  any  great  development  of  their  foreign 
commerce,  or  the  creation  of  any  new  or  large  markets 
for  the  surplus  products  of  their  industries,  it  is  not  pre- 
tended that  the  removal  of  restrictions  on  exchanges  will 
of  itself  and  alone  be  all-sufficient  to  create  trade  and 
commerce.  An  adequate  supply  of  moisture  is  neces- 
sary for  the  successful  culture  of  the  soil,  and  without 
moisture  there  will  certainly  be  no  harvest.  But  in 
addition  to  a  supply  of  moisture,  there  must  be  also  a 
certain  fertility  of  the  soil,  good  seed,  and  sufficient 
tillage,  or  the  fruition  of  the  earth  will  amount  to  but 
little.  And  as  in  agriculture,  so  in  commerce.  There 
must  be  the  right  to  have  commerce — or  the  right  to 
freely  exchange— or  there  will  be  no  commerce.  But 
in  addition,  in  order  that  commerce  may  increase  and 
be  profitable,  there  must  be  good  and  efficient  instru- 
mentalities for  carrying  on  commerce — ships,  money, 
credit,  etc. — and  an  ability  to  offer  the  commodities  that 
it  is  desired  to  exchange  (sell)  on  terms  (at  least)  as 
favorable  as  are  ofifered  by  our  competitors. 

Making  a  practical  application   of  these  principles, 


-i»i 


-w-. 


ff? 


66 


WHY    PVE    TRADE  AND  HOW   WE    TRADE. 


the  curious  existing  commercial  relations  between  Bra- 
zil, Japan,  and  the   United  States,  before   referred   to, 
admit  .yf  an  easy  explanation.     The  United  States  buys 
coffee .  of  Brazil  to  the   amount  of  about  $36,000,000 
annually;  because  coffee  to  the  United  States  is  a  ne- 
cessity, and  the  United  States  can  buy  better  of  Brazil 
than  elsewhere.     Brazil  in  like  manner  consults  her  own 
interests  in  buying  such  of  the  products  of  foreign  na- 
tions as  she  needs.     The  natural  tendency  is  that  she 
should  buy  of  her  best  customer.     But   until  within  a 
very  re'-.ent  period,   the  price  of  all  manufactured  pro- 
ducts— mainly  by  reason  of  our  bad  fiscal  policy — has 
been   so  much   greater  in  the   United  States   than    in 
Europe,  that  Brazil  could  not  afford  to  enter  the  marl-ets 
of  the   United    States   for   her  supplies,  and  she  went 
where  her  dollar  would  buy  the  most.     But  now  that 
prices  have  declined,  and  the  United  States  can  supply 
Brazil,  with  cloth,  furniture,  railroad  material,  and  the 
like,  as  cheap  or  cheaper  than  Europe,  it  is  found  that 
the  s  ime  fiscal  policy  which  has  abnormally  increased 
the  price  of  American  products,  has  also  deprived  the 
United  States  of  an  ocean  marine  efficient  for  cheaply 
and  quickly  effecting  exchanges  with  foreign  countries; 
so   that  if   the   American    producer  desires  to   sell  to 
Brazil,  he  is  now  under   the    necessity   of   employing 
English  shipping  instrumentalities  to  do  so  cheaply  and 
quickly.     And  what  is  true  of  the  present  condition  of 
our  commercial  relations  with   Brazil  is  equally  true  of 


iiilikitea^iMiii^Miiiiiii^^ 


niiiiiiii 


iW 


WHY   WE    TRADE  AND  HOiV    WE    TRADE. 


our  commercial  relations  with  Japan  and  other  coun- 
tries, which  naturally  tend  to  trade  with  the  United 
States,  but,  by  reason  of  our  fiscal  and  commercial  poli- 
cy, are  absolutely  prevented  from  doing  so. 


mmmmmmimmmmmmmmmm 


